Integrated Report 2018
Fiscal Year Ended March 2018

Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, JAPANTEL +81-3-5695-8833 FAX +81-3-5695-8970

www.nisshinbo.co.jp/english/

Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650, Japan

Dear Shareholders and Investors,
It gives me great pleasure to present you with this year’s Integrated Report for
Nisshinbo Holdings Inc.
We published our first Integrated Report in July last year and held our regular overseas
investor road show the following September. Financial data remains very important
to investors, but during the road show I noticed growing interest in ESG and othernon-financial information.
For some time, we have been working to ensure a balanced focus on both financial andnon-financial aspects of the Nisshinbo Group’s development to support growth incorporate value. Respecting diversity has also been an important part of the way we run
our business. The Nisshinbo Group has a wide range of different businesses
an automobile brake friction materials business with the leading market share worldwide,a wireless and communications business supplying systems that support public
infrastructure and safe maritime navigation, and a micro devices business with prospects
for rapid growth driven by the spread of IoT. As the Nisshinbo Group becomes more global,
our business is becoming even broader and more complex. By harnessing the increasing
diversity of all parts of our operations, I believe we can create the basis for innovationand sustained growth.
This Integrated Report brings together a wide range of financial and non-financial
information. We believe it is the ideal tool to showcase the Nisshinbo Group’s efforts toincrease corporate value.
Please feel free to provide feedback to help us continue to make improvements.
July 2018

Masaya Kawata
President
Nisshinbo Holdings Inc.

Nisshinbo Group Snapshot

Contents

Net Sales

Operating Income

Profile1

Nisshinbo Group Snapshot

2

Our Vision for the Nisshinbo Group

4The Nisshinbo Group’s Corporate History

Textiles38

At a Glance

6

Message from the President

40Electronics (Wireless and Communications)

12

Adapting Our Business to Society’s Needs

42

Electronics (Micro Devices)

14

The Nisshinbo Group’s Business Model

44

20
21

Special Feature

48

Precision Instruments

Mobility

50

Chemicals

52

Textiles54

Real Estate

JRC Mobility Inc. Interview with the President

EnergyManagement Framework

R&D Interview
56

President and Outside Director Dialogue

27

Safety60

Board of Directors, Audit & Supervisory
Board Members and Managing Officers

31

Philosophy

		Corporate Governance

66

Risk Management

67

Compliance

Micro Devices

Precision
Instruments(Years ended March 31)

Operating Income

EPS

Shareholders’ Equity Ratio
and ROE(billions of yen)

(yen)

(%)

16

180

50

The Nisshinbo Group’s Financial Strategy

72

Eleven-Year Summary

74

Management’s Discussion and Analysis

80

Financial Statements

THE INCLUSION OF Nisshinbo Holdings Inc. IN ANY MSCI INDEX, AND THE USE OF MSCILOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTEA SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Nisshinbo Holdings Inc. BY MSCI OR
ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI.
MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKSOF MSCI OR ITS AFFILIATES.

Editing Policy

87

History88

Key Companies in the Nisshinbo Group89

Corporate Data

40

12
120

30
20

60
4

10
0

0

0

Number of Employees

2014 2015 2016 2017 20182014 2015 2016 2017 20182014 2015 2016 2017 2018

Research andDevelopment Expenses

Greenhouse Gas
Emissions per Unit of Sales(thousand)(billions of yen)(t-CO2/million yen)

25

25

1.6

20

20

15

15

1.2

0.8
10

5

5

0

0

Financials

10

about the Group’s environmental, social and governance (ESG) activities toprovide readers with a more detailed picture of the Group’s business

0.4

activities. This information highlights how the Nisshinbo Group is striving toincrease corporate value in areas such as personnel training and the environment, complementing efforts to increase value through earnings growth.

ROE

8In addition to the usual financial data and information about businessstrategies, Nisshinbo’s Integrated Report 2018 includes an in-depth section

Shareholders’ Equity Ratio

Management Framework

70

Automobile
BrakesChemicals

Automobile Brakes

ESG Index Selection

Financials¥15.0 billion

Business Segments

62

TextilesSpecial Feature

Environment

24¥512.0 billion

Strategy

17

Automobile Brakes

Micro Devices

Year ended March
2018

Year ended March
2018

Precision
Instruments

Micro Devices Business Strategy

46

Real EstateElectronics

ProfileOverview

Wireless andCommunications

Electronics

Wireless andCommunications

Chemicals

Strategy

16

Real
Estate2014 2015 2016 2017 201802014 2015 2016 2017 20181

2014 2015 2016 2017 2018

Our Vision for the Nisshinbo Group

Challenging towards
Environment and Energy Company group

Holdings Inc. is targeting long-term goals of ROE of 12% and net sales of ¥1 trillion in the fiscal year
ending December 2025. We have identified four strategic business fields: Wireless Communications
and Electronics, Automotive Parts and Devices, Lifestyle and Materials, and New Energy and Smarta New Era of Technological Innovation& Super Smart Society

ProfileAs an Environment and Energy Company group working to create a sustainable society, Nisshinbo

Society. Focusing on those fields, we aim to continue growing as a company that delivers solutions
for today’s global society.
Strategy

SafetySpecial Feature

QualityBusiness Segments

CustomerManagement Framework

Supporting Efforts to Realize the SDGs
Nisshinbo Holdings, Inc. is aiming to help realize a

Nisshinbo Holdings will continue to seek out and take on new challenges as the world enters asustainable society, as set out in the Public Entity

new era of far-reaching change, driven by accelerating advances in technology and the transition
to smart societies. We will reinforce all types of management related to our business – Group,

That commitment coincides with the aims of the

global, environmental, diversity and cash flow management – to help realize a sustainable society.

Sustainable Development Goals (SDGs), which we areworking towards through our business activities as
an Environmental and Energy Company group.
2

3

Financials

principle in the Nisshinbo Group Corporate Philosophy.

The Nisshinbo Group’s Corporate History

The Nisshinbo Group’s Corporate History

Nisshinbo Group Corporate Philosophy
Nisshinbo Holdings Inc. traces its roots back to Nisshin Cotton Spinning Co., Ltd., which was
founded in 1907 to mass produce high-grade cotton yarn. After the war, the Company actively
PUBLIC ENTITYCONSISTENT INTEGRITYINNOVATION

principles in its Corporate Philosophy – Public Entity – Nisshinbo’s mission is to contribute toBelieving that our companies are public
entities, we shall aim to realize a sustainable society*1 by proposing solutions to
global environmental problems.

Respecting the diverse cultures andcustoms of the world, as well as
biodiversity, we shall conduct fair andsincere business activities with pride asa corporate citizen.

Maintaining our spirit of response tochange and unceasing challenge, weshall create an affluent future together
with our stakeholders*2.

society through its business activities.

Profilestarted to develop its operations by moving into non-textile businesses. Led by one of the key

From 1945 onwards, amid Japan’s post-war recovery*1 A sustainable society is a society where environmental preservation and effective resource use are balanced with economic rationality and where, as a result, all people
can enjoy comfortable lifestyles long into the future.

and rapid economic growth, the Nisshinbo Group shifted*2 A stakeholder is any person or organization involved in or affected by our corporate activities, including customers, shareholders, employees, business partners,
community residents, and governmental organizations.

its focus from its core, founding business of textiles toautomobile brakes, chemicals and other non-textile
businesses. In the 1960s, the automobile brakes businessJapan. Nisshinbo also actively developed its precision
instruments and chemicals businesses, building new
the Plaza Accord in 1985, forcing the Company to restruc-

Nisshinbo GroupNet Saleture its operations. Textile and non-textile businesses(billions of yen)plants and adding capacity. The yen appreciated following

Electronics

non-textile businesses generated more than half of theAutomobile Brakes

Group’s sales for the first time.

Next 2015

Long-term goals

Three-Year Management PlanThree-year Management Planfor the fiscal year ending December 2025

Fiscal year ended March 2011

Fiscal year ended March 2014

to fiscal year ended March 2013

to fiscal year ended March 2016

Plan objectives

Plan objectives

Generate sustained growthin the environmental business
Establish unique technologies and new
businesses in the environment and energy fields

Regenerate and expand the electronics business
Strengthen the automobile brakes business
Improve profitability and enhance global
competitiveness in each business
Expand the environmental business
Generate synergies

The Nisshinbo Group is targeting ROE of 12% andnet sales of ¥1 trillion in the fiscal year ending
December 2025. To achieve those long-term goals,
the Group will expand existing businesses, create
new businesses and actively conduct M&A. Guided
by our corporate slogan, Challenging towards a New
Era of Technological Innovation & Super Smart
Society, we will work to raise the presence of the
Nisshinbo Group in innovation, technology, marketingand business systems

OthersLong-term goals

12
Net sales: ¥1
ROE:%
trillion

Special Feature

also stepped up moves into overseas markets. In 1990,

Challenge 2012

Strategy

expanded, spurred by the growing popularity of cars in

600

1907 Established Nisshin Cotton Spinning Co., Ltd.

Business Segments

500

Key Events

400

1944 Began production of friction materials
1946 Nishi Arai Plant begins operations as a chemicals
production facility

300
Management Framework

Friction materials division starts production of brake linings
1958 Established Nihon Kohbunshikan Co., Ltd., begins
production of plastic bobbins

200

1960 Began production of rigid urethane foam in the chemical
products field

100

1981 Completed construction of the Tatebayashi Chemicals Plant(now the Tatebayashi Plant)
1997 Established Nisshinbo Automotive Manufacturing Inc.
(U.S.A.)

0

2010

2011

2012

2013

2014

2015

2016

2017

2000 Established Continental Teves Co., Ltd. (joint venture)(Now Continental Automotive Co., Ltd.)

April 2009
Adopted a holding company structure

December 20102005 Acquired additional shares in New Japan Radio Co., Ltd.

Japan Radio Co., Ltd. and Nagano Japan Radio Co.,
Ltd. become consolidated subsidiaries
TMD Friction Group S.A. becomes a wholly
owned consolidated subsidiary4

May 2015

April 2017TOKYO SHIRTS CO., LTD.
becomes a wholly owned
consolidated subsidiary

October 2017

October 2015
November 20112018

Nanbu Plastics Co., Ltd.
becomes a wholly owned
consolidated subsidiary

5(Years ended March 31)

Papers business soldJapan Radio Co., Ltd. becomes a wholly
owned consolidated subsidiary

March 2018
Acquired Ricoh Electronic Devices Co., Ltd.,making it a consolidated subsidiary

Financials

1999 Established Saeron Automotive Corporation (South Korea)

Message from the President

Message from the President

Financial Results for the Fiscal
Year Ended March 2018

in the automobile brakes business, amortization of goodwill
related to the acquisition of European company TMD ended in
the previous fiscal year, completing the five-year schedule. That
lifted profits by just under ¥6.0 billion.

Sales declined but net income
rose sharply.

Ordinary income increased year on year, in line with growthowners of Nisshinbo Holdings Inc. reflected the booking of ¥11.7

Results Highlights

billion in gain on sales of shares of subsidiaries and associates

YoY

due to the transfer of the papers business, and ¥5.4 billion in gain

17/3

18/3

527,274

512,048-15,227

-2.9%

4,890

15,086+10,195+208.5%

Operating Incomeon the sale of rental real estate.

Growth rateLong-term ROE goal of 9% achieved.
Strategy

Diversity andDiversification

Net Sales(millions of yen)

Net Sales and ROE (Years ended March 31)
Ordinary Income

10,556

19,700+9,144

Electronics (left)+86.6%

Automobile Brakes (left)

Others (left)

Net Income Attributableto Owners of Nisshinbo
Holdings Inc.

ROE (right)

3,575

26,352+22,778

Profilein operating income. The steep rise in net income attributable to

Net Sales : ¥ 512.0 billion
ROE+637.2%

year on year to ¥512.0 billion and operating income rose 208.5%(billions of yen)

(%)

600

12

500

10

400

8

300

6

200

4

100

2

0

0

Special Feature

In the fiscal year ended March 2018, net sales declined 2.9%

: 10.6 %to ¥15.0 billion. We also posted net income attributable toowners of Nisshinbo Holdings Inc. of ¥26.3 billion, an increase of

President
Nisshinbo Holdings Inc.

¥22.8 billion from the previous fiscal year. There were several
reasons for the lower sales and higher profits.
The main reason for the decline in sales was the transfer ofthe papers business to Daio Paper Corporation. The sale of thebusiness is in line with our growth strategy, which is based onchanneling management resources into businesses related to theautomotive and super smart society fields. Established 70 years
ago, our papers business generated sales of ¥32.6 billion and2010 2011 2012 2013 2014 2015 2016 2017 20182017. However, we decided that the business would have more
opportunities to develop and grow with Daio Paper, a leading

In 2009, we divided Nisshin Cotton Spinning Co., Ltd. into

company in paper products.

separate business segments and established Nisshinbo Holdings

There are two reasons for the strong growth in operating

Inc. as the Group’s holding company. At the time, we set two

business, moved back into profit with operating income of ¥693

long-term goals for the fiscal year ending March 2018: sales of

million, compared with an operating loss of ¥5,486 million in the¥600 billion and ROE of 9%. This fiscal year, we achieved ROE ofprevious fiscal year. In its core marine systems business, Japan

10.6%, exceeding the target, but we missed our sales target due

Radio launched new equipment for the aftermarket and the small

to the decision to prioritize capital efficiency. However, we

and medium-size vessel market, leading to higher sales. In its

should mention that one-off gains from the transfer of thesolutions and specialized equipment business, sales of large-

papers business and the sale of rental real estate assets madescale disaster prevention systems declined, but companywide

a substantial contribution to ROE. The Group still needs to doefforts to cut fixed costs helped to support profitability. Second,

more to increase operating income.

7

Financials

6

income. First, Japan Radio Co., Ltd., part of the electronics

Management Framework

operating income of ¥2.6 billion in the fiscal year ended MarchBusiness Segments

Masaya KawataMessage from the President

Message from the President

The current fiscal period is a transitional period due to• Selected as a constituent stock in ESG indices used bya change in the Group’s fiscal year-end from March 31 to
December 31. That makes year-on-year comparisons difficult,

GPIF – MSCI Japan ESG Select Leaders Index and MSCI

but in real terms, sales and profits are currently trending ahead

Japan Empowering Women Index (WIN)improve ROE using financial leverage. To reiterate, Nisshinbo

Based on the above assumptions, we need to increase

must increase operating income. Below are our main balance

the Group’s operating margin to more than 7-8%, taking into

sheet and operating income assumptions for 2025.

account variations in each business due to their specificcharacteristics.

• Held road shows for overseas investors onof the pace in the fiscal year ended March 2018.

• Integrated Report selected by GPIF’s external asset

Measures Implemented since 2017

managers in Japan as “excellent” and “most improved”• Changed fiscal year-end from March 31 to December 31

and started looking at adopting international financial

Allocating management resources
to drive growth.

reporting standards (IFRS)		To maintain the Group’s financial health and protect it from

However, we are likely to see distortions in our business if

negative developments in the operating environment, we

we focus too much on quantitative growth, undermining prospects

aim to maintain the shareholders’ equity ratio at between

for sustained growth. We will need to keep the Company on trackaround 30% and 40%.

with qualitative growth, or in other words, stay focused on ESG.

		Total assets currently stand at more than ¥650 billion,

Nisshinbo will only be able to grow and develop in a healthy way

while sales are just over ¥500 billion. By 2025, we wantby balancing quantity and quality. Our approach is visualized in

to create a leaner company, with total assets roughly

the diagram below.

Profilean ongoing basis

equivalent to sales.

Our Vision for the Nisshinbo Group

make our business more global, while also improving both offensive and defensive corporate governance. We are accelerating

Target quantitative and qualitative
growth with measures focused on
ROE and ESG.

our growth strategy by prioritizing management resources on
businesses related to the automotive and super smart society
fields. Below is a list of the key measures we have implemented

Create constructive dialogue with investors

Key measures and outcomes in each businessWe place great importance on communicating with investors.

• Sold papers businessCurrently, we invite institutional investors to results briefings• Invested in ZMP Inc., a venture company developing

twice each year, for interim results and full-year results. As

technology for autonomous vehicles

ESG and SDG initiatives

around ¥400 billion. To achieve ROE of 12%, that means

We regularly visit institutional investors overseas to exchange

we need to generate net income of about ¥50 billion.

ideas. However, since 2017 in particular, we have noticed much

Taking into account our corporate tax rate, that equates togreater interest in ESG investing. Nisshinbo is aiming to be an

operating income of roughly ¥70-80 billion.

Environmental and Energy Company group, and Public Entity isa key principle in the Group’s Corporate Philosophy.

Increasing the Group’s Corporate Valueas an Environment and Energy Company group

President of Nisshinbo Holdings, I attend the briefings with myopportunity to gain direct feedback from equity market participants.
Also, amid rising awareness of Japan's Stewardship Code,• Commercially launched carbon alloy catalysts to replace

we are receiving a growing number of requests for engagement

platinum catalysts for fuel cells

meetings. We are actively responding to those requests, taking• Acquired Ricoh Electronic Devices Co., Ltd., making it

on board opinions objectively and reflecting them in management.

a consolidated subsidiary

Based on Nisshinbo's cost of capital, we need to achieve ROE• Sold the drum brake business• Established JRC Mobility Inc.

of 9% or higher. That long-term goal was finally attained in the• Decided to make New Japan Radio Co., Ltd. a whollyfiscal year ended March 2018. However, there were substantial
contributions from extraordinary income. To ensure ROE keeps

owned subsidiary

improving, we have to increase operating income.

• Broadened and strengthened collaboration between

In our new long-term goals, we are aiming for ROE of 12%

Group businesses

Communication

e
dR

te

Corporate Philosophy

In

Public Entity, Consistent Integrity,
Innovation

Business Conduct Guidelines

businesses globally. Our long-term sales goal is ¥1 trillion byCompliance, Environment,
Human Rights, Workplace,
Product Safety, Procurement(CAGR) since 2009, when Nisshinbo Holdings was established,capital efficiency instead of simply chasing sales. While our

auditing firm to strengthen auditing of global business activities

primary goal is to achieve ROE of 12%, we have no plans to

8•Group management•

Global business management•

Environmental management•

Diversity management•

Cash flow management

Long-term Goals (fiscal year ending December 2025)
ROE: 12%Net Sales: ¥1 trillion

Business Portfolio

Quantitative growth/ROE

that target is well within reach. However, we need to prioritize• Appointed Deloitte Touche Tohmatsu LLC as an additional

ort

p

ra
teg

in 2025. That is the level we need to aim for as we grow our2025. Given that sales have risen at an annual rate of 9.8%

• Abolished the internal advisor and consultant system

Diversity

Annual Report9

Shareholder Returns
Financials

Key measures and outcomes related tocorporate governance and stakeholders

Society 5.0, IoT, AI, Big DataManagement Framework

Improve ROE

compatible with new environmental regulations

CSR Report• Expanded the lineup of copper-free friction materials

SDGs(Sustainable Development Goals)

Business Segments

Yantai, China• Made Japan Radio Co., Ltd. a wholly owned subsidiary

New Era of TechnologicalInnovation & Super Smart Society

ESG

senior management team. I believe the briefings are a valuable

Qualitative growth/ESG• Established a new friction materials production site inSpecial Featuresince 2017.

		Based on those goals, shareholders’ equity in 2025 will be

Strategy

To support growth, we need to reinforce Group management andMessage from the President

Message from the President

The Nisshinbo Group’s Strength: Diversity Management
The Environmental component of ESG is now firmly

Group’s management, starting with a project in the current

entrenched at Nisshinbo through contributions we make tofiscal period to map our value chain.

society through our business activities. One example is a

For more information about our ESG activities, please visit the Nisshinbo

project being run by Japan Radio in Brazil to promote wider

Group’s CSR website.

use of rainfall radars in the state of Paraná. The radars are part
areas at high risk of landslides due to localized heavy rain.

The Corporate Governance Code was revised in June 2018.

Details about the Group’s efforts to promote environmental
management can be found later in this report (see pages 36-37

We carefully studied the changes and adjusted the Nisshinbo

for more details).

Corporate Governance Policy accordingly. Investors are particu-

MissionSupport society’s sustainable growth as an Environment and Energy Company group

Value

Safety, security, disaster prevention, health, comfort, convenience and smart society
Strategic business fields

DomainOur response to Japan’s Corporate Governance Code

Field testing of the system started in early 2018.

Corporate Philosophy (Public Entity, Consistent Integrity, Innovation)
Nisshinbo Group Business Conduct Guidelines

Profilehttp://www.nisshinbo.co.jp/english/csr

of an early-warning system that accurately measures rainfall in

Philosophy

1 Wireless Communications and Electronics 2 Automotive Parts and Devices
3 Lifestyle and Materials 4 New Energy and Smart Society

Strategy

Overall strategy (corporate strategy)

1 Reinforce existing businesses
3 Actively use M&A

2 Leverage the results of R&D projects

larly interested in companies' policies for cross-shareholdings.

In terms of the Social component of ESG, we have actively

In the fiscal year ended March 2018, we took the following

In 2018, Nisshinbo also became the official sponsor of Japan’s

steps related to that type of shareholding.

table tennis team. Our aim is to support the development ofyoung people through sport.

• As set out in our Corporate Governance Policy, we

We are also putting in place the necessary systems to give

Manufacturing technology/ICT strategy/Automotive/Medical/IoT and AI

Collaborative projects

Group R&D/Train young personnel/Improve back-office efficiency/Trading company functions(between businesses and divisions)

Wireless andCommunications

Micro
Devices

Automobile
BrakesStrategy

supported the training of junior tennis players for many years.

Precision
Chemicals Textiles
Instruments

regularly assess the purpose and economic rationale

seniors, women and other diverse groups in our workforce thefor cross-shareholdings and report the results to theopportunities to realize their full potential, as part of wider efforts

Micro devices businessemployees in the current fiscal period to gain an accurate picture

rative approach, which is visualized in the diagram above.

Until the fiscal year ended March 2018, the electronics businessnies’ shares we hold. In the fiscal year ended March

For example, in automotive projects, we are reviewing existing

covered both Japan Radio and New Japan Radio. However, due

2018, we cut the number of companies by seven to 73,

technologies in all the Group’s businesses and bringing themto the different characteristics of their operations and further

down from 85 in the fiscal year ended March 2015.

together to generate new synergies in automotive-related

growth in our electronics business after the acquisition of Ricohbusinesses, aiming to spur innovation. One of those projects led

Electronic Devices, we decided to separate the electronics

to the creation of JRC Mobility Inc., which we spun off as an

business into two sub-segments — the wireless and communi-

independent ADAS business in April 2018.

cations business and the micro devices business.

• We have incrementally reduced the number of compa-

of the situation in the Group. At the same time, all our businesssites in countries and regions around the world are actively
working to support their local communities.
We are also making progress with the Governance element• At the same time, we have been reducing the numberof ESG. To ensure transparent and fair management andof shares in our holdings.

dynamic, bold decision-making, we are implementing offensive• We have also received approaches from companies about

corporate governance measures to generate sustained growth

selling their cross-holdings of Nisshinbo shares. In accor-

and increase corporate value over the medium to long term.

dance with new supplementary principles in the revised

One example is our decision to abolish the internal advisor

Corporate Governance Code, we will respect the wishes

and consultant system in 2017. In 2018, we overhauled theof those companies and not hinder the sale of shares.
Note: Supplementary Principles 1.4.1

greater incentives to directors to increase Nisshinbo’s corpo-

When cross-shareholders (i.e., shareholders who hold a company’srate value. Specifically, we introduced a restricted stock

shares for the purpose of cross-shareholding) indicate their intentioncompensation system to replace the existing stock

to sell their shares, companies should not hinder the sale of theoption system.

cross-held shares by, for instance, implying a possible reduction ofbusiness transactions.

Going forward, we plan to actively implement ESG measures
as a Company that coexists with and contributes to society.
Nisshinbo is tackling issues related to the United Nation’s
mance goals to be achieved by 2025.
The SDGs, on the other hand, clearly define a number of priority global issues that need to be tackled by 2030 and envision
the kind of world we should be working to create. The 17

and supply analog semiconductors. The global market for thetype of analog chips they supply is worth around ¥1 trillion. US

Earnings are set to be driven
by a number of emerging
growth businesses.

companies have the top three positions in the market, led by
Texas Instruments Inc., but after adding Ricoh Electronic
Devices to the Nisshinbo Group, sales have increased to ¥80
billion, giving us the momentum to challenge for third spot.
We are looking forward to taking on our rivals in the global

In the near term, the automobile brakes business and the micro

market by combining the respective strengths of New Japandevices business are set to drive growth until results start toRadio and Ricoh Electronic Devices in device design and manu-

emerge from collaborative projects that harness the strengths

facturing to increase competitiveness (see pages 42-45 for moreof our diversified business.

details about the micro devices business).

Automobile brakes business* Brake friction materials that comply with new US regulations. The limit on

We are seeing strong orders for our copper-free friction materials*,copper content in friction materials will ultimately be reduced to 0.5%.

which comply with environmental regulations throughout North

SDGs contain many elements that coincide with our own

The Nisshinbo Group encourages broad-based interaction between

America. To respond to that demand, we are investing to increasedevelopment themes and existing technology portfolio. Wea large number of different businesses and divisions in areas

production capacity in North America, which should start feeding

are now looking into how the SDGs can be integrated into thefrom research and development through to personnel strategy.

through to earnings from 2019.

10

11

Financials

Leveraging the strengths of ourdiversified business to promote
diversity management.

SDGs. We have set out several long-term financial perfor-

ble for the micro devices business. Both companies manufacture

Emerging Growth Drivers

Management Framework

remuneration system for senior executives in order to provide

New Japan Radio and Ricoh Electronic Devices are responsi-

Business Segments

We are currently implementing nine projects using that collabo-

or sell the shares.

Special Feature

Board of Directors, which decides whether to retain

to change the Group’s culture. As an initial step, we surveyedAdapting Our Business to Society’s Needs

Adapting Our Business to Society’s Needs

companies that can take on board and share the Nisshinbo Group

Selling Group businesses can also change our businesswith its business strategy, aiming to contribute to the sustainable growth of society as an Environment

Corporate Philosophy. PMI* in back-office areas is important, but

structure, but there are other options to simply selling a business.

and Energy Company group. Our goal is to build a diverse, innovative corporate culture organicallyfront-line business integration is absolutely essential. Ensuring

The key question is, does that business have better prospects

our business partner shares our philosophy and values is a vitalfor growth outside the Nisshinbo Group? We have to consider

part of working together towards clear goals that enhance ourwhether any sale would improve customer and business partner

respective strengths and compensate our respective weaknesses.

satisfaction, and also whether it would be positive for employee

M&A deals without a common business philosophy are unlikely

stability and future prospects.

to succeed, no matter how good the target company’s business* Post-Merger Integrationand through the use of M&A.

ProfileGuided by its Corporate Philosophy, the Nisshinbo Group is overhauling its business structure in lineor technologies.
It is also important that we do not implement deals for theMasahiro Murakami,

Targeting Growth Fields in Line
with Our Corporate Philosophy

At Nisshinbo, we believe diversity is vital to innovation, while

Companies must continually adapt to society’s ever-changing

combining different elements in many ways. By creating aneeds, but some companies are incapable of change because

company with diverse businesses and people, we are fostering

they are trapped by past successes. In the mid-2000s, wea multitude of different views and values that can become therealized that the Nisshinbo Group’s business structure was noseed of innovation. However, as we create a more diverse business,longer in tune with trends and needs in society, prompting us to

we have to remember that the Group also needs cohesion to

sharply shift strategic direction towards growth fields where we

ensure everybody is working towards the same goals. That’s

could respond to those needs. We decided that the environment

why we are embedding our Corporate Philosophy across theand energy fields were the best areas to achieve our goals.

Group to ensure our employees stay true to Nisshinbo’s healthy

Instead, we set up project teams on a case-by-case basis. Staff

The Nisshinbo Group is targeting ROE of 12% or higher in 2025.

in project teams have to work hard because they need to continue

Looking even further ahead, we are developing new businesses

routine duties as well, but our concern is that creating a special

that have good prospects for growth, such as automotive tech-division would make M&A an end in itself, undermining the wholenologies for vehicles that are safer, more convenient and moreidea in the first place — to establish Nisshinbo’s presence inenergy-efficient, and hydrogen energy technologies that reduce

growth fields. Another important element of successful M&A is

CO2 emissions. To achieve our targets and make those businesses

ensuring senior executives are personally involved in negotiations

a success, we have to draw on diverse technologies and values

so that they can make decisions with all the information at hand,to drive innovation, eschewing our previous approach to diversifi-

rather than entrusting everything to the managers in charge ofcation of doing everything ourselves.

the project. Sticking to our objectives is crucial to the success ofAmid far-reaching changes in societies and economies

M&A, but we need the courage to exit the business before theworldwide, we have to build a business model that dovetails

job is done — if we have to. The acquisition price of a business iswith society’s need for sustainable growth, allowing us to

not the be-all and end-all of a deal, but we have to be careful not

contribute to society through our business activities as an

to pay over the odds.

Environment and Energy Company group.

Special Feature

Vice President
Chief of Corporate Strategy Center

Converting Diversity to Innovation

Strategy,sake of them. Nisshinbo does not have a special M&A division.

homogeneity is its enemy. Innovation depends on constantly

Corporate Philosophy(Public Entity, Consistent Integrity, Innovation)
Business Conduct Guidelines
Support society’s sustainable growth asan Environment and Energy Company group
Safety, security, disaster prevention, health,comfort, convenience and smart society

by humanity today, such as environmental destruction andglobal warming, to make life safer and more secure for people

Our Stance on M&A Deals

everywhere. Contributing to society through our business

Using M&A is an effective means of shifting our business portfolio

activities will also translate into growth that rewards stakeholders,to growth fields. Each M&A deal has its own rationale — to secure

which embodies one of the core principles of the Nisshinboa head start for growth, acquire technologies, or to increase

Group’s Corporate Philosophy — Public Entity.

competitiveness, for example, but all of our deals will be ingrowth fields. Our focus will be on driving the development of the

our business portfolio towards growth fields, resulting in a morebusiness, not on short-term growth or quick investment returns.

diverse Group in terms of both businesses and management.

In identifying the best M&A targets, we will put priority on

12

1 Reinforce existing businesses
2 Leveraging the results of R&D projects
3 Active use of M&A

Can share our philosophy and values

Philosophy
Values to be shared by all employees

Focused on the environment and energy

MissionSocial role

Provide similar value

Value
Value provided to society

Businesses related to our strategic
growth fields

DomainWhere do we compete?

Grow our existing or peripheral businesses
Expand our value chain• Move into new business fields•

Strategy
How do we compete?

13•

Financials

That process of growing by serving society is driving a shift in

Strategic business fields
1 Wireless Communications and Electronics
2 Automotive Parts and Devices
3 Lifestyle and Materials
4 New Energy and Smart Society

M&A targets

Management Frameworkprovide solutions that address some of the biggest issues faced

The Nisshinbo Group

Business Segments

entrepreneurial spirit.

As an Environment and Energy Company group, we aim to

Basic Stance on M&A

The Nisshinbo Group’s Business Model

The Nisshinbo Group’s Business Model

Innovation and Value Creation Powered by Diversity
Since the earliest days of the Company, the Nisshinbo Group has grown and developed by constantly
mixing and matching technologies and businesses. Today, our business model is based on harnessing
the power of diverse businesses, people and values to drive innovation and address the ever-changing
Profileneeds of society. Using that approach, we are allocating management resources to growth fields andElectronics

developing new businesses.

Autonomous
Operation
Mobility
Mobility
Strategy

Wireless andcommunications

Brake pads

Micro devices

ABS/EBS** Anti-lock Brake System/
Electronic Brake System

Smart Society

EnergyEnergyPrecision parts

Special Featureprocessing

Automotiveparts

Machinery andprocessing
technologies

Fuel cell

Environment
Environment

Business Segments

Textile spinning technologies

Continental
Automotive(Equity-method
affiliate)

components

Plastic molding

Management Framework

SafetySafetyMedical14

Chemicals

APOLLOCOT

Financials

Chemical fibers

15

Special Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

Mobility
As technology improves, autonomous systems have the potential to cut traffic accidents and reduceenergy used in transport. Nisshinbo is bringing together existing technologies from across the Groupand refining its expertise in ADAS and other technologies for autonomous land, sea and air transport.
Our goal is to help improve safety and reduce environmental impact.

JRC Mobility Inc.
Interview with the President

ProfileAutonomous technology for cars, ships and other modes of transport is attracting growing interest.

Kinji Kato
President
JRC Mobility Inc.
Strategy

Mobility Categories
High-precision Positioning Services
Transport Infrastructure
Cooperation with ZMP

Related SDGs

Q1

Why did Nisshinbo set up JRC Mobility?

We plan to double output of ETC devices in a few years’ time
when development work is completed. We think the new ETC

Until now, Nisshinbo has developed its ADAS* business using adevices have enormous potential, as they are based on aGroupwide approach, drawing on automotive-related technologies

next-generation system that could be adopted by many countries

from various parts of the Group, such as the communications

around the world.
Meanwhile, we started real-world testing of DSSS*1 at two

equipment business run by Japan Radio Co., Ltd. However, withlocations in Japan from 2018. Over time, the systems will be

we need to accelerate our development projects. We also needinstalled at several thousand major intersections. We also began

to establish a manufacturing system that satisfies the quality,

installing and operating traffic counters*2 this year. We expect

cost and delivery (QCD) demands of automakers. Given thosehighway authorities to steadily adopt Japan Radio’s millimeter-wave

requirements, we decided to create an independent company

radars, which are relatively unaffected by environmental conditions.

focused on the mobility field by spinning off relevant divisions*1 Driving safety support systems: Transmit information about road conditions,traffic lights and other traffic data to drivers at intersections and other locations
to prevent accidents.
*2 Installed on expressways and at other sites, traffic counters monitor vehicle
volume and identify cars driving in the wrong direction.

from Japan Radio’s communications equipment business,aiming to make decision-making faster and more flexible.

high-performance millimeter-wave radar and ultrasound sensors

Q3

for automotive applications. Next, we plan to transfer all existing
automotive products such as electronic toll collection (ETC)

In addition to automobile brakes, the Nisshinbo Group has a wide

devices and GPS equipment to JRC Mobility by January 2020.

range of automotive-related businesses anchored by strong* Advanced driver assistance systems

relationships built on trust with users in the automotive sector.
The precision instruments business manufactures metal andTell us about the current state of Nisshinbo’s
automotive-related operations.

plastic parts for vehicles and the chemicals business supplies
bipolar plates for fuel cells. There are also potential synergies

Japan Radio develops and supplies ETC devices used on roads

with analog chip supplier New Japan Radio Co., Ltd. in IC sourcing

in Japan. In April 2018, the company won an order to develop

and other technologies.

devices for the next generation of road toll collection systems,

In June 2017, Nisshinbo Holdings Inc. invested in ZMP Inc.,

with potential applications in Japan and overseas markets.

which is developing autonomous robots, drones and other mobility

17

Financials

16

How do you intend to generate synergies
with the Nisshinbo Group?

Management Framework

We are using a two-stage process for the spin off. First,
we are transferring divisions responsible for developing

Business Segments

Level 4 autonomous driving on track to become a reality by 2025,

Q2

Special Feature

Autonomous Ship Operation

Special Feature

Mobility

EnergyEnvironment

Philosophy

set up, we plan to strengthen our ability to develop and launch

opportunities by combining our sensors and communications

new products, aiming to make an even greater contribution toalso started supplying traffic counters and systems to detectsector. Under the projects, companies in the sector are developing

technology with ZMP’s expertise in autonomous operation.

society in the automotive field and across the full spectrum ofvehicles driving in the wrong direction. Japan Radio’s detection

new technologies and services. Japan Radio is developing amobility, such as ships and aircraft.

equipment incorporates radar sensing technologies originally

number of core technologies, such as collision avoidance maneu-

developed for marine and weather applications. Compared withvering technology and a ship-to-shore information sharing system

existing camera-based equipment, the company’s products arethat uses satellite links and a VHF data exchange system (VDES).

compact, competitively priced, and perform better at nighttime

The company is aiming to achieve semi autonomous ship

and under difficult weather conditions such as fog. They are also

operation by 2022 and full autonomous operation by 2030.

less affected by glare and color contrast issues.

Autonomous operation has the potential to improve safety and

Safety and security are two other areas where the Nisshinbo

High-precision Positioning Services

quasi-zenith satellite system (QZSS). The GNSS receiver chips

To make autonomous vehicles a reality, positioning services need

will play a vital role in realizing new high-precision positioning

1 ITS roadside terminals wirelessly connected to the DSSS

to be more accurate than ever before. Today’s GPS systems areservices. We plan to start shipping sample chips in autumn 2018.

2 Onboard terminals

accurate to within 10 meters. Replacing those systems with

To promote the new services overseas, Japan Radio became one

3 Radar-based DSSS detection equipment

high-precision positioning technology that improve accuracy to aof the founding shareholders in Global Positioning Augmentation

few centimeters would enable autonomous vehicles to determine

Service Corporation (GPAS) in June 2017.
The new company is tasked with establishing key

of technology is likely to be in high demand from a wide range oftechnologies to support a range of positioning services forfields. Japan Radio Co., Ltd. is developing a global navigation

the super smart society, including autonomous cars, agriculturalsatellite system (GNSS) chip that receives signals from themachinery and construction equipment, as well as for marine

through optimal route planning.

Ship-to-shore Communication Systema <vehicle-road / vehicle-vehicle>

Right-turn collision warning systemb <vehicle-road / vehicle-vehicle>

Left-turn bicycle collision warning system

Satellite linkc <vehicle-road>

Pedestrian crossing collision warning system
Satellite terminald <vehicle-road / vehicle-vehicle>

Special Feature

and weather forecasting.

reduce environmental impact by increasing fuel efficiency

Strategy

their current road lane using only satellite positioning. That kindconcept, which aims to revolutionize productivity in the maritime

Coastal satellite station

Head-on collision warning system

How GPAS Services Will Work

VDES

Transport Infrastructure

1 Ground monitoring stations around the world gather

Profileequipment using camera-based sensing technology. We see newGroup can provide value to society. Backed by our new business

Using its existing radar sensing technology, Japan Radio has

SafetyVDE

Coastal VHF
stationThe Japanese government is rapidly working to create safer

observational data from global navigation satellites

transport infrastructure using information and communication

2 Using the data, errors in satellite orbits and clocks are

Ship-based systems

technology (ICT). The aim is to cut the number of fatalities from

Maintenancetraffic accidents to less than 2,500 in 2018 and build the world's

3 Corrected data is transmitted to users via QZSS*

safest road network by 2020. As part of that push, Japan Radio is

4 Data distribution via the Internet is also possible

developing a driving safety support system (DSSS). The system

5 Transmitted data is used to calculate the position of the user,

is designed to reduce traffic accidents and improve driving

enabling positioning services accurate to within a few centimeters

efficiency by using sensors to detect pedestrians and otherdangers and transmit warnings wirelessly to drivers.

* Quasi-Zenith Satellite System

1

Collision
avoidance
maneuveringaAutopilot

Sensors
Engine-related
control

Land-based systems
Datacenter
J-Marine Cloud

Remote collision
avoidance
maneuvering
Harbor monitoring

3b

Cooperation with ZMP
2c

In June 2017, Nisshinbo Holdings Inc. invested in ZMP Inc. toother modes of transport, an area where ZMP has a high level3of technical expertise. ZMP sells and leases platforms to developdautonomous technologies and is also developing a wirelesselectroencephalogram sensor and other new products.

5

The company’s experiments with robot cargo trolleys and auton-

2

Management Framework

promote collaboration in autonomous technology for cars and
QZSSBusiness Segments

accurately calculated

omous delivery robots for office buildings and other facilities

GPAS / MADOCA*

with ZMP to identify new autonomous operation applications inAutonomous Ship Operation* MADOCA: Software under development at the Japan
Aerospace Exploration Agency (JAXA) to accurately estimate
satellite orbits and clocks

various modes of transport for the Group’s existing portfolio of

Autonomous ship operation offers many potential benefits, such

ICT and sensing technologies.

as fewer collisions, improved ship operation and lower crewing
costs. The Ministry of Land, Infrastructure, Transport and Tourism(MLIT) is supporting a number of projects to advance its i-Shipping

4 Internet

18

19

Financials

1

have been attracting attention. We intend to step up cooperation

GNSS base station

Special Feature

Mobility

EnergyEnvironment

EnergySafetyPhilosophy

making them a promising technology for residential, automotive and other applications.

ProfileR&D Interview

Hydrogen fuel cells are the ultimate source of clean energy. They emit no CO2 emissions during use,

Toshihiro Kijima

The Nisshinbo Group is aiming to help create a hydrogen-based society by establishing technologies

Executive Managing Officer
General Manager, Business Development Divisionand reducing costs for fuel cells through the development of carbon bipolar plates, carbon alloy
catalysts and hydrogen sensors.

Strategy

Energy Categories
Bipolar Plates for Fuel Cells
Carbon Alloy Catalysts

Related SDGs

Q1

How will the business development
division help Nisshinbo achieve its goalof ¥1 trillion in sales by 2025?

teams is like fostering cooperation between different industries.
With Group R&D, we are supporting activities that build
partnerships, as we think it is vital for everybody in the Groupto understand what other divisions do and to secure the under-

R&D by knitting together research and development efforts acrossstanding of key individuals. We are unlikely to achieve any

the whole Nisshinbo Group. Our long-term strategic goal for Group

meaningful results if teams only take a superficial interest in

R&D is to provide value for the super smart society. To realize

working together. In joint research with other companies,that goal, we are conducting development activities aimed atcontractual conditions present a significant barrier to progress.

providing solutions based on four strategic themes — hydrogen,That’s why I believe the Nisshinbo Group’s greatest strength ismobility, medical & healthcare and public infrastructure. Acrossits vast range of technologies and customers, which create thethe Group, most spending on research and development ispotential for open innovation within the Group.

channeled into existing businesses, so achieving our 2025 sales
target will depend largely on organic growth in those businesses.
With Group R&D, we will target projects that are not part ofQ3

What progress is Nisshinbo making inhydrogen-related products?

new business worth around ¥50–60 billion from those projects

Last year, Ballard Power Systems Inc. selected our carbon alloy

by 2025, but our aim is to increase that amount further.

catalysts for a fuel cell stack used in portable fuel cell applications.

To create new businesses, we are focusing on the nexus

It marks the first commercial use of a non-platinum catalyst in

between technology seeds and market needs, and we also

the electrode of a polymer electrolyte fuel cell. The next step iswant to leverage the Group’s strengths by incorporating our

to work with Ballard on the development of new catalyst fuelexisting technologies and customer base.

stacks for fuel cells used in forklift trucks.

Management Framework

existing businesses. At the moment, we see the potential for

Business Segments

The business development division is tasked with leading GroupSpecial Feature

Ultrasonic Gas Sensors

Our carbon bipolar plates are already widely used in Ene-Farm

20

How are you encouraging cooperationand generating synergies between
Group businesses?

adoption in fuel cell vehicles (FCVs). Responsibility for developing
carbon bipolar plates for vehicle applications has been transferredfrom Nisshinbo Chemical Inc. to our division and we are acceler-

The Nisshinbo Group has a wide range of different businessating development by harnessing the resources of the wholesegments, so bringing together all their research and development

Group as a joint project.

21

Financials

Q2

residential fuel cell systems, but we also see the potential forSpecial Feature

We are also continuing to develop hydrogen gas sensors.

Mobility

EnergyEnvironment

Safetyin the future hydrogen society. I believe Nisshinbo is well-placed

Carbon Alloy Catalysts

Ultrasonic Gas Sensors

to take advantage of that trend.

Philosophy

gravity of hydrogen, helium and other atmospheric gases.

gies of Japan Radio Co., Ltd., as well as the customer base ofplatinum to carbon as the main material. We can ensure stable

The sensors have been developed by combining technologies

supplies of carbon alloy catalysts because they do not use

from across the Nisshinbo Group – ultrasound technologies

platinum, a precious metal. In September 2017, Ballard Powerdeveloped by Ueda Japan Radio Co., Ltd. for the medical field,

Prompted by Nisshinbo president Masaya Kawata, we started

Systems, Inc., a leading fuel cell manufacturer in Canada,and signal processing technologies created by Japan RadioIn the field of renewable energy, such as wind and solar

running workshops for young Nisshinbo employees in 2016.

selected our carbon alloy catalysts for portable fuel cellCo., Ltd. for radar and wireless communication products.

power, electricity companies have not been able to depend

One of the aims of the workshops is to encourage talented

applications, marking the first commercial use of a non-platinum

Unlike existing products, our sensors do not require heaters

entirely on nature for power generation because output does

employees in their late 20s and early 30s to think about what

catalyst in a fuel cell electrode. The use of our carbon alloy

or rare metal catalysts, helping to extend their usable lives.

not fit the daily patterns of end-users. To overcome that issue,

kind of organization the Nisshinbo Group should be in 2030 andcatalyst has reduced the volume of platinum in Ballard’s fuelResponse time is also fast and they can detect gas over a wide

there is growing momentum behind the idea of using fuel cells

beyond. The goal is to cultivate personnel across our organization

cell stack by roughly 80%. Ballard added the fuel cell stack toarea. We plan to start test sales of a portable helium gas leakto generate electricity to match energy demand periods.

who can lead the Nisshinbo Group well into the future. In 2017,its product range from December 2017 and it is attracting

detector in 2018. Compared with large, heavy and expensive

Electricity generated by renewable sources is used to split

workshop participants were invited to present their ideas ininterest for outdoor and backup power supply applications.

existing products, our new sensors are small, light and battery

water into oxygen and hydrogen, which is then stored andEnglish at the Management Policy Meeting, which is attended by

Nisshinbo Holdings Inc. Based on market research, we haveQ4

decided to focus first on developing helium gas leak detectors.
We hope to start test sales of the detectors before the end of 2018.

used later by fuel cells to generate electricity.
The world stands on the verge of a major turning point in

Tell us about your longer term development ideas and strategies.

We are now pushing for adoption in fuel cell-powered forklifts,

senior Nisshinbo personnel from around the world. Their ideas

which are gaining popularity, particularly in North America.

were well-received by attendees.

We are also working to improve the performance of our carbon

powered, meaning they can be used easily whenever andwherever they are needed.
After securing explosion-proof certification, we plan to rollalloy products before the FCV market starts to take off.

energy, and fuel cells are set to play an increasingly important roleout portable hydrogen gas leak detectors, while also working on

In this way, the Nisshinbo Group is already working todeveloping smaller versions for use in FCVs. We aim to makeour hydrogen detectors the de-facto standard by the 2030s,
when FCVs are set to take off in the market.

Carbon Bipolar Plate Sales

Carbon bipolar plates manufactured by the Nisshinbo Group are

Special Feature

make the hydrogen society a reality.

Bipolar Plates for Fuel Cells

Strategy

Ultrasonic gas sensors measure differences in the specificwe have taken a completely new approach by switching from

ProfileIn cathode catalysts for polymer electrolyte fuel cells (PEFC),

of Ueda Japan Radio Co., Ltd. and the signal processing technolo-

The project involves bringing together the ultrasound technologies(billions of yen)used in the Ene-Farm residential fuel cell system and in fixed

1.5

fuel cells for commercial use. In order to improve productivity,
Business Segments

we are accelerating the automation of production lines forbipolar plates used in residential applications, where Nisshinbo

1.0

already has a high market share, and for other promising fixed
fuel cell applications.
Meanwhile, in the automotive sector, efforts are under way

0.5

to develop technology that will steadily reduce the cost of fueldevelopment of fuel cell-powered buses and trucks is gaining
momentum. Our carbon bipolar plates are roughly the same0

thickness as metal versions, but are easier to mold and more

14.3

15.3

16.3

17.3

18.3

resistant to corrosion. They are also ideal for automotive
applications due to their low weight. We have transferred all
Fuel cell stack

responsibility for development work on automotive bipolar

Ultrasonic gas sensor

Management Framework

cell vehicles (FCVs). In China and North America in particular,

plates to Nisshinbo Holdings, Inc., creating a framework thatallows us to draw on the resources of the whole Group.
We are targeting adoption in FCVs from 2025.
Financials

22

23

Special Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

Environment
companies to develop environmental products. Many of the Sustainable Development Goals (SDGs)
adopted by the United Nations include environmental factors, highlighting how concerns about theenvironment are rising globally. Against that backdrop, we are bringing together existing technologies from across the Group to develop new solutions that address environmental issues.

Brake Friction Materials Compatible with
New Rules on Copper Content

without any loss of biodegradability, is increasingly being adopted

Effective from 2021, environmental regulations in the US will

demand. We plan to establish more Carbodilite production sites,

prohibit the sale of friction materials that have a copper content

including possible locations in overseas markets, to supportof more than 5% or new vehicles fitted with those materials.

production at our existing Tokushima Plant.

for use in biodegradable plastic, pointing to potential growth in

From 2025, the limit on copper content will be reduced to 0.5%.

Carbodilite Sales and Forecasts

Demand for copper-reduced and copper-free friction materials is(billions of yen)orders for new friction materials will exceed those for existing3

materials from 2020. We have taken the lead in the sector in

Brake Friction Materials Compatible
with New Rules on Copper Content
Bio-carriers for Wastewater Treatment
Glass-like Carbon

developing copper-reduced and copper-free friction materials.
The whole Group has worked together to develop the new
2materials, which were fully launched in 2017. Nisshinbo Brake
Inc. is now steadily increasing production capacity for the newSpecial Feature

Carbodilite

Strategy

likely to increase in other markets, as well as the US. We forecast

Environment Categories

materials at its Tatebayashi Plant and at sites in America andother overseas markets. We aim to increase market share by1

building a volume production framework to address projected
growth in demand for copper-reduced and copper-free friction

Related SDGs

materials, while also making improvements to our products

0based on market feedback. We plan to expand the product14.3

lineup to make a greater contribution to the environment and

15.3

16.3

17.3

18.3

18.12 *

Bio-carriers for Wastewater Treatment

Carbodilite is a high-performance polycarbodiimide-based plastic

Microorganism-based systems are generally used to treat

material developed by the Nisshinbo Group. We supply Carbodilite

wastewater from factories and other facilities. To improve thein water-based, oil-based and powder forms, and as an additiveeffectiveness of those systems, Nisshinbo Chemical Inc. supplies

in adhesive agents. Due to its unique highly reactive, low-toxic

AQUAPOROUSGEL (APG) bio-carriers for microorganisms. APG

profile, Carbodilite is blended with coatings, inks and various

is a high-performance bio-carrier that settles rapidly into waste-plastics (polyester-based plastic, biodegradable plastic,

water, while its sponge-form provides a large surface area forpolyurethane elastomer and others) to improve the durability,

bacteria to attach to and colonize. APG is highly regarded inadhesiveness and other properties of secondary products.

Japan, where it is used by leading water purification companies.
APG also contributes to water purification processes incoating and ink industries, tighter regulations governing volatileother countries, particularly in Asia. APG is used in distributedorganic compounds (VOC) and efforts to reduce environmental

wastewater treatment facilities and in factory water treatment

impact are spurring demand for Carbodilite, which is a highly

facilities in China, and in public sewage treatment facilities insafe, water-based additive that can reduce required temperatures

the Philippines. Other markets for APG in Asia include Vietnam,

in drying processes. Also, in Europe and other markets whereThailand and Taiwan. China faces increasingly serious atmosphericrules on the use of non-degradable plastics are being tightened,

and water pollution problems related to its large land mass anddemand for biodegradable alternatives is growing strongly.

vast population. To address those issues, the government is

Carbodilite, which helps improve the durability of materials

tightening regulations and increasing penalties for polluters.

25

Financials

In the automotive, heavy-duty anti-corrosion coating, construction

Management Framework

Carbodilite

Business Segments* Converted to 12-month forecast

grow our friction materials business.

24

ProfileAs an Environment and Energy Company group, Nisshinbo is harnessing the technologies of GroupSpecial Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

Safetytarget markets. Until now, our products have largely been used

The Nisshinbo Group creates safety and security solutions for the super smart society and supplies

bio-carriers in China’s water treatment market. We aim toin semiconductor applications, but we also see prospects forthem to markets worldwide by harnessing the technologies and expertise of Group companies.

expand our business in the market by stepping up cooperation

growth in other areas. Specifically, work is under way to develop

with Chinese manufacturers to build local production andtools for molding neodymium magnets and curved glass

Nisshinbo's safety products include weather radars, river level monitoring equipment and othersales networks.

screens, which are likely to be key products in smart societies.
Existing parts and materials are also being replaced with glass-likeelements of disaster prevention systems, as well as equipment for ships to ensure safe navigation.
Nisshinbo is also developing safety devices for the medical and healthcare field.

carbon versions. We are targeting sales of ¥2.5 billion in 2025.

How Bio-carriers Work

TreatmenttankTreated water

Strategy

To reach that goal, we plan to actively promote product ideas to

Raw
water

ProfileThose tougher rules are spurring rapid growth in demand forcustomers, increase production capacity and reduce lead times.
We will also continue research into revolutionary manufacturing

Safety Categories

technology to prepare for full-scale production in the future.

Weather Radars

Bio-carriers: APG

Overseas Solutions Business
Smart Textiles
Plant Factories

Special Feature

J-Marine NeCST
Water purification and APG

Related SDGs

Business Segments

Processed glass-like carbon products

Glass-like Carbon Sales and Forecasts(billions of yen)

1.0

Bio-carriers: APG

Glass-like Carbon

Management Framework

0.8
0.6

Demand for glass-like carbon is growing on the back of several
trends, such as increased demand for high-performance semi-

0.4

conductors spurred by the shift to vehicle electrification and the
spread of IoT and AI, and growing use of OLED screens for0.2

smartphones and other applications. Our unique glass-likecarbon coating has the high heat-resistance of graphite, as well0

as low electrical resistance and impermeability to dust, gases
used for many different types of products in a wide range of

17.3

18.3

18.12 *

Financials

16.3

and liquids. Those special properties mean glass-like carbon is* Converted to 12-month forecast

26

27

Special Feature

Existing Weather Radars

Weather radars developed by Japan Radio Co., Ltd. are widelyused by Japan’s Meteorological Agency and Ministry of Land,
2 Elevation: mechanical

Infrastructure, Transport and Tourism and by overseas meteoro-

scanning

logical agencies to forecast weather conditions and rainfall.
Cases of localized heavy rain have been increasing in Japanin recent years due to thunderclouds occurring in linear precipirisk of natural disasters caused by flooding and extreme wind.

Environment

SafetyPhilosophy

systems and weather radars in Southeast Asia. In May 2018,

During development, we sought to make the system asJapan Radio signed an agreement with the Vietnam Air Traffic

usable as possible by using input from many experienced crew

Management Corporation to test a new multilateration system*

and by dispatching R&D staff to work on ships. The system,

for airport surface monitoring and to cooperate on related

which combines the flexibility of paper charts with the intuitivetechnologies, under a contract awarded to us by Japan'suser interfaces of tablet devices, was launched in January 2018

Ministry of Internal Affairs and Communications.

after undergoing testing on the NYK Group’s cruise ship Asuka II.

* Multilateration systems receive secondary radar signals from aircraft via
multiple receivers located around the airport, enabling precise detection of
aircraft positions based on the difference in time between signal reception ateach receiver.

We plan to launch a second-generation system with improved
functionality in October 2018. We estimate the target market forthe system is roughly 10,000 ships worldwide and we plan to

Existing radar systems, which typically need about five minutes

drive uptake by offering different screen sizes.

to complete a single observation cycle, are too slow to create

1 Direction: mechanicalstereoscopic images of fast-forming thunderclouds.
Phased array* weather radars developed by Japan Radio

scanning

Phased Array Weather Radars

comprise multiple antennas that emit a beam of radio waves

Receiving station
Transmitting station

Mode S squitter

observation of thunderclouds. Weather forecasting systems

Screen display

with phased array radars can rapidly create forecasts for localized
Japan Radio is running tests on its latest phased array radar at
a location in Chiba to overcome challenges such as converting
weather observations to rainfall estimates and identifying theWeather and sea
state information

Equipment room

Interrogation Aircraftsignalcontrol
tower

heavy rain, helping to reduce damage from natural disasters.

Optical fiber
cable networkat airport

Digitalchartsdifference between rain, snow and hail, which is currently hardscanning

to do with current weather radars.
2 Direction: mechanical* Compact weather radars with multiple, overlapping antenna beams that
reduce blind spots in radar coverage.

Fog(Office)

ReceivingstationOverseas Solutions Business

J-Marine NeCST

Japan Radio is working to increase overseas sales of integrated

The J-Marine Navigational electronic Conning Station Table

disaster prevention systems, which combine weather radars,(NeCST), jointly developed by Japan Radio and Nippon Yusen

river level prediction and forecasting systems and other elements.

Kaisha (NYK) Line, is a vessel navigation support system that

The company is focusing on markets in Asia, where there ismanages and shares route information such as digital nauticala growing need for disaster prevention systems.

charts, which are viewable on a large screen. The system is also

Share information between
ships and land

linked to J-Marine Cloud, a package of cloud-based maritime

record in wireless facilities for coastal applications, we estab-

information services. In a world-first, users can make handwritten

lished a local subsidiary in January 2017 and launched full-scale

annotations to digital charts on the NeCST screen, helping tomarketing activities in June to tap rising demand for ship

improve the efficiency of route planning. The system has thenavigation support systems and disaster prevention facilities.

potential to be an important part of autonomous shipping

We are also working with partners in the public and private

operations in the future as it facilitates information sharing

sectors in Japan to expand exports of airport surface surveillance

between ships and land and supports safe navigation.

Financials

28

NeCST

Management Framework

Phased array weather radar

NeCST(Onboard)
Reference
signalscanning

In Indonesia, where Japan Radio already has a strong track

Ship routeinformation

Business Segments

1 Elevation: electronic

Internet

Hand-written
information

Special Feature

Interrogation signalthat can be electronically steered, enabling fast, stereoscopic

Strategytation zones and other weather conditions, leading to elevated

EnergyProfileWeather Radars

Mobility

J-Marine NeCST

29

Special Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

Philosophy
Also, in August 2017, we supplied the facilities and technolo-

The Nisshinbo Group believes strongly that its companies are public entities. While pursuing profit

New digital tools such as IoT and AI now make it possible togies to Okinawa Cellular Telephone Company, which started

on the basis of fair competition, we consider it our mission to contribute to society at large throughconnect various physical objects and collect and analyze vast

selling strawberries in Okinawa Prefecture in July 2018.

our corporate activities. We formulated our Corporate Philosophy and Business Conduct Guidelines

amounts of data from them. Companies are stepping up efforts

We will build on our success in plant factories to develop
smart factories, using the Group’s sensing and communication

more value to products that are used every day. The Nisshinbo

technologies to monitor and collect large amounts of data on

Group aims to help create monitoring services and improve

cultivation conditions to support harvest forecasting and stabilize

workplace environments by developing smart textiles as devices

yields. Our aim is to expand the business by supplying smartthat can collect more vital data than existing contactless devices.

factory equipment and services.

For example, we are currently developing uniforms forto reflect the values and standards of behavior that all our employees around the world share andrespect. That framework underpins our activities across a wide range of different business fields.
Strategy

to develop new markets by using those technologies to add

Plant factories are another example of how we are combin-

workplaces where people are exposed to loud noise. Drawing

ing the Group’s technologies to contribute to society as anon voice-recognition support technology from New Japan Radio

Environmental and Energy Company group.

ProfileSmart Textiles

Philosophy Categories
Nisshinbo Group Corporate

Co., Ltd., communication technology from Japan Radio andPhilosophy

conductive textiles from Nisshinbo Textile Inc., we have created

Fair Competition

noisy environments. Using the same principle, we are also

Diversity

developing a waist band that can predict the onset of labor pains.

Human Resources

The band collects and analyzes information on the baby’s vital
signs (heat rhythm, heart rate, pulse, etc.) and relays the informa-

Safety and Healthtion to smartphones or devices in hospitals and clinics. We aim

Implementing Environmental

to make these products a reality by combining the sensor

Management

technologies of Group companies with our textile planning andRelated SDGs
Strawberry cultivation at a plant factory

procurement capabilities.

Business Segments

development capabilities, data communication and data analysis

Special Feature

Business Conduct Guidelines

a uniform that allows the wearer to hear conversations clearly in

Plant Factories
Securing stable supplies of safe and reliable food products is
Management Frameworka growing problem due to extreme weather events worldwide.
Nisshinbo is working on technology to cultivate plants inhermetically sealed plant factories. We have already applied
the technology to create Japan's first plant factories that use
only artificial light, allowing the cultivation of tasty strawberries
all year round, regardless of temperature and weather conditions.
The factories are located at our Tokushima and Fujieda businesssites and supply strawberries under the APOLLOBERRY brand.

Financials

30

31

Special Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

Nisshinbo Group Corporate Philosophy

Nisshinbo Group Corporate Philosophy

Business Conduct Guidelines

In January 2013, section 1502 of the Dodd-Frank WallStreet Reform and Consumer Protection Act came into effect.

standards of behavior expected of all executives and employees.

As a result, all companies listed on stock markets in the US

The top executives at each Nisshinbo Group company make amust disclose whether conflict resources* are used in theircommitment to implement the guidelines and establish systems

products. As a company involved in the supply chains of listed

to ensure they are effective. In the event of a serious incident in

US companies through Group companies in its electronics,

contravention of the guidelines, they also take responsibility for

automobile brakes, chemicals and precision instruments busi-

resolving the issue.

nesses, Nisshinbo conducts surveys on the use of conflict
resources in its operations and reports the results to its

Business Conduct Guidelines of the Nisshinbo Group
Environment

Human Rights

Workplace

Product Safety

Procurement

Compliance
Workplace

Environment
Product Safety

procurement, such as ensuring the Group is not complicit inhuman rights abuses and acts of violence.

Human Rights* Conflict resources refer to four minerals (tin, tantalum, tungsten and gold)
mined in the Democratic Republic of the Congo and its neighboring countries
that are sold to fund armed insurgents.

Procurement
Nisshinbo GroupCSR Procurement
Basic Policy

Diversity
The Nisshinbo Group aims to create a working environment

Nisshinbo Group Corporate Philosophy

CONSISTENT INTEGRITYINNOVATION

Believing that our companies are public
entities, we shall aim to realize a sustainable
society*1 by proposing solutions to global
environmental problems.

Respecting the diverse cultures andcustoms of the world, as well as biodiversity,
we shall conduct fair and sincere businessactivities with pride as a corporate citizen.

Maintaining our spirit of response tochange and unceasing challenge, we shallcreate an affluent future together with
our stakeholders*2.

We conduct our business activities with fullrecognition that the global environment
depends on the maintenance of a delicate
harmony among all living things and that weare part of that diverse harmony.

32

We satisfy stakeholder expectations bysensitively anticipating changes in the times
and the environment and boldly taking on
new challenges.
We build ties of trust with stakeholders andwork together with them in our businessactivities.

In April 2018, we formulated and disclosed our Workthe entire supply chain. To support sustained progress at Group

Style Reform Action Plan, which is based on three themes

companies, we added the promotion of CSR procurement to our— rectifying long working hours, encouraging employees to use

list of key performance indicators in 2017. We also formulated

annual paid holidays, and promoting flexible working.

CSR Procurement Guidelines based on business conditions at

At the moment, our priority issue is empowering women.

each Group company and conducted surveys in our supply

We hold a range of training courses and lectures for every level

chain to raise awareness about CSR procurement at suppliersof employee across the Group, including joint seminars for(see page 68 for more details).

managers and their female staff to raise awareness about this

New Japan Radio Co., Ltd. established Supply Chain CSR

issue. In December 2014, we announced a voluntary action plan

Promotion Guidelines in 2015. The company holds meetings withto promote women to executive and management positions.

partner companies to explain its stance on CSR procurement andIn line with the plan, Group companies have developed general

conducts CSR surveys every other year. In the 2017 survey,

business action plans based on the Act on Promotion of Women's

the company received responses from all of its 325 key suppliers.

Participation and Advancement in the Workplace. Under their

Going forward, New Japan Radio will work to build partnerships

plans, Group companies have set specific targets for the number

with suppliers based on mutual trust while also reinforcing efforts

of female managers and new recruits as part of efforts to support

to create a sustainable supply chain.

women in the workplace.
Financials*1 A sustainable society is a society where environmental preservation and effective resource use arebalanced with economic rationality and where, as aresult, all people can enjoy comfortable lifestyles
long into the future.

We respect the diverse cultures and customsof countries and regions throughout the worldand uphold the laws and regulations of each.

We work toward the creation of an affluent
society by constantly creating new andoriginal value.

in the Group Corporate Philosophy.

Policy, which sets out our basic stance on CSR initiatives acrossManagement Framework

We offer products and services that help solve
global environmental issues, with an eye todeveloping a society where all people canenjoy comfortable lifestyles long into the future.

We fulfill our social responsibilities asa corporate citizen by acting in good faithand with fairness at all times.

their full potential, helping to support Innovation, a key principle

We have formulated the Nisshinbo Group CSR Procurement

Business Segments

PUBLIC ENTITY

We remember at all times and in all our
activities that the ultimate goal of our Group
is to contribute to society.

where employees with diverse values and abilities can reach

Fair Competition

Our corporate philosophy expresses the values we share as members of the Nisshinbo Group.

Special FeatureCompliancecustomers. We will continue to take steps to promote responsible

Business Conduct Guidelines of the Nisshinbo Group

Strategy

The Business Conduct Guidelines of the Nisshinbo Group define

ProfileThe Nisshinbo Group believes strongly that its companies are public entities. While pursuing profit
on the basis of fair competition, we consider it our mission to contribute to society at large throughour corporate activities. To achieve further growth in global society by utilizing the organizational
culture we have cultivated, we have formulated our Corporate Philosophy and Business Conduct
Guidelines to reflect the values and standards of behavior that all our employees throughout theworld share and respect.

*2 A stakeholder is any person or organization involvedin or affected by our corporate activities, including
customers, shareholders, employees, business
partners, community residents, and governmentalorganizations.

33

Special Feature

Mobility

EnergyEnvironment

Based on the belief that people are vital to the success of

The Nisshinbo Group places top priority on safety in its businessMeasures to Support Raising Next-Generation Children*.

companies, the Nisshinbo Group puts considerable effort into

activities. In line with that thinking, the Group conducts systematic

Under the plan, we aim to create a workplace where employees

training personnel. Human resources training starts as soon as

safety and health activities to promote personal physical andcan fulfill their potential and maintain their careers while balancing

new graduates enter the Company. Our general training program

mental wellbeing and to create safe and welcoming workplaces.

work and life commitments. To achieve that goal, the plan includes

is separated into streams that will eventually lead to promotion to

At each business site, we conduct risk assessments related

a number of targets for paternity leave and diverse work styles.

mid-level manager, section head and division head positions.

to work processes, facilities and chemical substances on a

Similar measures are being implemented by 12 Group companies

Employees also take courses for specific skills and learn aboutscheduled basis and progressively implement preventativein Japan.

safety, human rights and the environment. In our specialist

measures in order of priority. We also run small group activities* A law enacted on April 1, 2005 to create healthy and supportive environments
for having and raising children.

training program, they acquire knowledge in areas specific tosuch as danger awareness training and near miss reporting, andeach business and job function, such as technology, accounting

implement KK mapping*. We also work to enhance the under-

and intellectual property. These training units and courses

standing of safety managers and raise risk assessment standards

combine to form a systemized training scheme. We also run a

at each Group company by running training sessions about our

special program for employees earmarked to become seniorapproach to risk assessments and how they are implemented.

managers. The program is designed to foster approaches,

In the event of an accident, we quickly implement countermea-

knowledge and behavior for their future senior manager rolessures to prevent any recurrence and share occupational accident

before they are promoted. In 2016, we also started running areports across the Group to prevent similar accidents fromworkshop for young employees to consider future group businessoccurring in the future.

strategies as part of efforts to cultivate future business leaders.

Average for Japanese manufacturing industry
Nisshinbo Group (Japan)

Nisshinbo Group (overseas)

1.2

0.8

0.4

0

15.3

16.3

17.3

18.3

* Frequency of injuries with lost work = number of employees injured with lostwork ÷ aggregate number of working hours x 1 million

Special Feature

operator action plan based on the Act on Advancement ofFrequency of Injuries with Lost Work*

Strategy

Safety and HealthPhilosophy

ProfileHuman Resources

Nisshinbo Holdings has formulated a general business

SafetyNew Japan Radio started implementing employee healthmanagement from April 2016, aiming to become a Healthy
Company. Initial measures were aimed at reducing passive
Business Segments

smoking and encouraging employees to take more exercise by

Systematic Process for Cultivating the Next Generation ofBusiness Leaders — Overview
Define role
Evaluate
performance

Systematic Process for Cultivating the Next Generation ofBusiness Leaders — Training Framework

improve their own health by rewarding them with points that can

Define role and evaluate performance for key positions

be used to purchase a range of items. New Japan Radio was

3 – 1 Selective external training

3 – 2 Practical workshops

Led byNisshinbo
Holdings

2 Training to attain management mindset

selected as a White 500 company in 2017 and 2018, recognizing
Management Framework

18 months

Development program

Next-generation businessleader program

the company’s outstanding efforts in health management.
New Japan Radio plans to roll out more measures and programs

Stream-based training for
future managers

1 Recognize own abilities

to achieve its goal of becoming a Healthy Company.
* A questionnaire-based exercise that evaluates and classifies each employee’s
ability to sense danger and any tendency to press ahead with an action evenwhen aware of that danger.

Workshops for younger employees
Training exchange programs with other sectors

Recommend participants for program

Selective

Identify future business leader candidates

Led by Group
companies< Regular review >Define role and evaluate performance for key positions

34

Financials

Define role
Evaluate
performance

introduced a system that awards points to employees for healthy
activities. The system is designed to incentivize employees to< Regular review >4 Management mindset follow-up training

Selection

walking 10 more minutes each day. In 2017, the company also

Training programs at individual companies orfor specific roles
OJT

35

Special Feature

Mobility

EnergyEnvironment

SafetyPhilosophy

(GWh)

6

Solar power generationin the Nisshinbo Group

Implementing Environmental Management

5

We are actively installing solar power generation systems

As an Environment and Energy Company group providing solutions to help tackle humanity’s
greatest challenge – global environmental issues – the Nisshinbo Group is creating a framework to
support the implementation of environmental management. We have set medium- and long-termsuch as facilities that use thermal processing. In the fiscal
3

year ended March 2018, installation work was mainly
carried out at domestic sites, helping to lift the Group’s
total solar power generation to 4.9GWh.

help create a sustainable society.

Business sites and subsidiaries with solar power systems:
Miai Machinery
Chiba
Tatebayashi
Tokushima
Nisshinbo Precision Instrument & Machinery Hiroshima
Nagano Japan Radio
Other sites

2

Profileenvironmental targets that dovetail with our business plans. By achieving those targets, we aim toMedium-term Environmental Targets: Key Themes and Results

4

at business sites that require large amounts of energy,

1
0
14.3

(Fiscal year ended March 2016 to fiscal period ending December 2018)

Increase the sales ratio for
products that contribute toa sustainable society

Targets forthe fiscal year
ending December
2018

Deploy model businesses
that put priority on
conserving the ecosystem

Ratio of total sales:

Ratio of total sales:

Initiatives

Protect rare species andimplement initiatives topreserve forest andriver environments.

Fiscal year
ended March 2018

Currently being
implemented at
10 business sites

Steady progress

40% or more

LCAs involve quantifying theenvironmental burden andpotential environmental
impact on the planet andecosystems of all inputs
during a product’s lifecycle,
from materials sourcing
through to disposal. LCAs
provide a useful benchmark
for designing environmentallyfriendly products.

Products and services that contributeto the realization of a sustainable
society are defined in accordance with
the OECD classification forenvironmental businesses. Products
and services that do not come underthat definition are assessed using
rigorous internal standards.
To contribute to humanity through ourbusiness activities, we are working togrow sales based on a holistic approachto production and sales.

Ratio of total sales:

Ratio of total sales:

23%

Steady progress, despitea decline due to the sale ofthe papers business

For more details, please visit the Nisshinbo Group’s CSR website.
https://www.nisshinbo.co.jp/english/csr/

44%

Steady progress

5

Reduce the volume of PRTR
substance emissions perunit of sales

5

10

Reduction of% ormore compared with fiscal year
ended March 2015

Reduction of% ormore compared with fiscal year
ended March 2015

Reduction of% ormore compared with fiscal year
ended March 2015

The Group is introducing solar
power systems and switching
to LED lighting, mainly atmanufacturing sites in Japanand overseas. The Group also
selects highly efficientenergy systems whenupgrading facilities.

Most greenhouse gases originate
from energy sources, so loweringgreenhouse gas emissions andreducing energy usage areclosely linked.
Another key measure is reducing
CFCs, which have a high global
warming potential. CFCs are used insemiconductor fabrication
processes. We are installingsystems that break down those
CFCs, leading to lower emissions.

PRTR substances are chemicalcompounds that are harmful topeople and ecosystems.
We have minimized emissions of
PRTR substances by switching toalternative low-toxic chemical
substances in manufacturing processes.

Energy usage reduced byEmissions of greenhouse

Emissions of PRTR substances up% compared with fiscal
year ended March 2015

gases reduced by%compared with fiscal
year ended March 2015

Steady progress

Greenhouse gas emissions started
falling due to a drop in energy
usage in the textiles business.

62

Improvethe recycling rate

90%

10%

or moreWe are working to
reduce raw material andpackaging material
volumes and effectively
reuse waste. We arefocusing on raising
recycling rates atoverseas sites.

compared with fiscal
year ended March 2015

83%

Emissions rose due tohigher emissions at Nanbu
Plastics Co., Ltd.

Steady progress,
despite a decline dueto the sale of thepapers businessLong-term Environmental Targets (fiscal year ending December 2025)
Increase the ratio of products

2

Reduce greenhouse gas emissions

15 % orthat contribute to a sustainable

per unit of sales bysociety tomore compared with fiscal year

total sales

65 % or more ofended March 201537

3

Improve the recycling
ratio to95 % or moreFinancials

136

Reduce greenhousegas emissions
per unit of sales

Management Framework

Progress andfactors

40% or more

Reduce energy
consumption
per unit of sales

18.3

Business Segments

Promote Life Cycle
Assessments (LCAs)

17.3

Special Feature

Step up activities tomaintain biodiversity

16.3

Strategy

Key themes

15.3

At a Glance

At a Glance

Precision
Instruments

Net Sales

Operating Income(billions of yen)(billions of yen)

64.9

1.7

60.6

Main business areas
Manufactures plastic products for home applianceand automotive applications and supplies processed
precision automotive parts and customized
production equipment for customers worldwide,

The Nisshinbo Group comprises six businesses: electronics, automobile brakes, precision instruments,
chemicals, textiles and real estate. Leveraging the manufacturing technologies and assets of ouroriginal spinning business, we have moved into various other business fields, where we supply

1.0

Segment Shareprimarily in Asia.

12.7 %

Plastic products

Customized production equipment

17.3

Electronics

Operating Income(billions of yen)

142.9

0.6

142.8
(5.4)

Main business areas

Chemicals

Marine systems

27.9 %Net Sales

Operating Income(billions of yen)

11.2

2.1

systems and weather radars, as well as marine

9.4

systems and communications equipment.

Segment ShareMarine radar and communications equipment

Communications equipment

GPS receivers

18.3(billions of yen)Supplies solutions such as disaster prevention

Solutions and specialized equipment
Disaster prevention systems and weather radars

17.3

Main business areas
Manufactures a range of highly promising productsin the environmental and energy fields, such as
Carbodilite, a modifier for biodegradable plastics

Strategy

Wireless andCommunications

Net Sales(billions of yen)

18.3

ProfilePrecision parts processing including parts for electronic
brake systems (EBS)

high-value-added products to satisfy a range of customer needs.

and waterborne resins, and bipolar plates for

1.3

Segment Sharefuel cells.

2.2 %Carbodilite high-performance chemical additive
Thermal insulation products
Bipolar plates for fuel cells

17.3Electronics
Micro Devices

18.3

17.3

Net Sales

Operating Income(billions of yen)(billions of yen)

51.6

2.1
1.7

Main business areas

TextilesWorking to expand sales of analog semiconductors

Electronic devices

54.6

1.7

1.8

Operating Income(billions of yen)

154.2

6.1

Main business areas

Real Estate

17.3

Net Sales

Operating Income(billions of yen)

8.0

8.4

5.0

18.3

17.3

38

18.3

Jeans and denim fabricMain business areas

growth strategy by effectively utilizing idle plantsites and other real estate assets arising frombusiness restructuring.

Segment Share

Sales

1.6 %

Leasing(0)
17.3

Uniform fabric and casual fabric

Denim

17.3

18.3

17.3

39

18.3

Housing lots
ARIO Nishi Arai and other properties

Financials

30.1 %

Disc pads and brake linings

Dress shirts, casual shirts and fabricTextilesProcures funds to support the Nisshinbo Group’s

5.8

using its network covering key markets worldwide.
Friction materials

cotton; supplies high-quality “Made by Nisshinbo”

18.3(billions of yen)

The Nisshinbo Group is the world’s leading maker ofbrake friction materials by market share; now

18.3

expanding its presence as a true global supplier

Segment Share

Mainstay business is products made from natural

Management Framework

Net Sales

Main business areas

Shirts17.3

18.3(billions of yen)

146.0

(billions of yen)markets worldwide.

10.7 %

Automobile Brakes

Operating Income

Semiconductor devices and SAW filters

10.1 %

17.3

Net Sales

dress shirts, denim, uniforms and other products to

Segment Share

18.3

18.3

microelectronics technologies.

Segment Share

17.3

17.3

(billions of yen)

55.8

and other electronic devices, supported by

18.3

Business Segments

48.8

17.3

18.3

Special Feature

Fine carbon products

Overview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal EstateElectronics

Wireless and Communications
ProfileJapan Radio Co., Ltd.

GPS compass(navigation support equipment)

In the wireless and communications business, part of the electronics business segment, Japan Radio
Co., Ltd. supplies advanced communication and navigation equipment with world-leading reliability

positioning system based on next-generation GPS receiver units,

to users in the shipping sector. It also provides various disaster prevention systems for dams andtargeting new applications in the rail, agriculture and construction

river management facilities and weather forecasting systems and is developing a range of autonomousmachinery sectors. In addition, on April 3, 2018, we established
JRC Mobility Inc., a wholly owned subsidiary of Nisshinbo

safety of public infrastructure.

Holdings Inc. The new company will focus on communication

Net Sales(millions of yen)

17.3

18.3

Marine systems

45,36032,58033,523

Communications
equipment

13,587

14,92316,028

Solutions andspecialized equipment

64,14567,367strong technical capabilities in the San Jose area, which is home toand launch new businesses in the near future.

In the fiscal year ended March 2018, the wireless and communica-

a high concentration of advanced technology firms, to improve thetions business reported net sales of ¥142,833 million, down 0.1%

Nisshinbo Group’s technologies and competitiveness.

ment of ¥6,179 million compared with the previous fiscal year.
Profits improved sharply, supported by a drop in variable and fixed
expenses as part of a Groupwide cost reduction program.

16,49815,839

Medical equipment

—

9,288

9,038

125,192

2,251
142,909

2,287
142,833(millions of yen)

16.3
2,297

(4,836)18.3(2,287)

Communications
equipment

(440)

572

1,387

Solutions andspecialized equipment

1,776(1,976)

1,509

—

(351)

(145)

Medical equipment

—

996

663

vessels declined, but sales increased overall and losses narrowed

elements such as weather radars and river level prediction anddue to higher sales of equipment for retrofit projects and for small

earnings base in our two main businesses in wireless andforecasting systems. In May 2018, we signed an agreement withto medium-size vessels. In July 2017, we established a newcommunications — marine systems and solutions. We will also

the Vietnam Air Traffic Management Corporation (VATM) to test asubsidiary, Alphatron Marine Korea, in Busan, South Korea. The

identify and focus on strategic businesses to channel resources

new multilateration system for airport surveillance and to cooper-

company is reinforcing our position in the small and medium-size

into growth fields, aiming to increase competitiveness by opti-

ate on new technologies, under a contract awarded to Japanvessel market and the aftermarket in South Korea.

mizing the business portfolio.

Radio by Japan's Ministry of Internal Affairs and Communications.

In marine systems, we will reinforce our presence in the

In mechatronics and power supplies, we will work toyear on year, supported by cost reduction and higher sales of intelli-

vessel retrofit aftermarket using an LCM*1 business approach.

expand the business and improve profitability by stepping up

gent transport system (ITS) products for automotive applications.

In small and medium-size vessels, we plan to increase demand

efforts to win new development projects and improve efficiency
in product development.

Total

In solutions and specialized equipment, sales of large-scalefor our products in the fishing vessel market by strengthening

disaster prevention systems for local governments declined, but

our technical support network and by growing sales of new andIn medical equipment, we aim to increase sales and profits

the business reported higher sales of driving simulation systems

distinctive products. In the fiscal year ended March 2018, weby offering a wider choice of next-generation diagnostic imaging

for automakers and equipment for road information systems.

launched our J-Marine NeCST navigational support system.

equipment and compact ultrasound image processing equipment.

Although there was a modest drop in sales overall, the businessIn the fiscal year ahead, we plan to roll out an upgraded sec-

*1 Life Cycle Management: Support services for the entire life cycle of

returned to profit on the back of cost reduction.

ond-generation system to increase market share.

reflecting delays to new product launches and moves to pareback the product lineup. Cost reduction led to narrower losses.
In medical equipment, sales and profits both fell year on year due

3,183

108
(5,486)(434)*2 Advanced Driver Assistance Systems

Main Locations
Key Companies

to weaker demand caused by production adjustments at customers.
(448)

vessels, from delivery to decommissioning

In communications equipment, we will offer a highly accurate

Main Locations and Key Subsidiaries

Location

Main Products and Services

Nagano Plant

Nagano, Nagano Prefecture

Disaster prevention systems,
mobile communications equipment

Nagano Japan Radio Co., Ltd.

Nagano, Nagano Prefecture

Disaster prevention systems,
mechatronics

Ueda Japan Radio Co., Ltd.

Ueda, Nagano Prefecture

Wireless communication equipment,
medical equipment

Alphatron Marine Beheer B.V.

The Netherlands

Navigation equipment

In April 2017, we established the San Jose Technical Development Center in California. The center is tasked with developing

693

highly stable next-generation wireless communications systems

Note: Figures for Nagano Japan Radio Co., Ltd. and Ueda Japan Radio

that can remain operational during emergencies and disasters, andCo., Ltd. included from the fiscal year ended March 2017.

technologies related to autonomous shipping operations. The center
40

Japan Radio Co., Ltd.

41

Financials

Other businesses/
Eliminations

increasing sales of vessel traffic systems (VTS) for ports andsales of integrated disaster prevention systems, which combine

Sales of mechatronics and power supplies declined, mainly

Mechatronics andpower supplies

systems is also growing in Asia. In response, we will focus on

Management Framework

Marine systems

17.3

frequent natural disasters. Demand for disaster prevention

Business strategies for the fiscal
period ending December 2018a stable and profitable operating structure by rebuilding the

In communications equipment, sales and profits both increased
Segment Profit

to providing integrated disaster prevention solutions to counter

Business Segments

2,098

In solutions and specialized equipment, we will target
maintenance demand for aging public infrastructure, in addition

In the wireless and communications business, we aim to create

In marine systems, sales of equipment for new merchant
—

Total

respond to developments in the promising market for ADAS*2

year on year, and segment income of ¥693 million, an improve-

66,116

Mechatronics andpower supplies

Other businesses/
Eliminations

will also foster links with local companies and research bodies with

Special Feature

16.3

equipment for the mobility field, aiming to rapidly and accurately

Summary of financial results for the
fiscal year ended March 2018

Strategy

driving and ITS products. Services provided by the business help prevent disasters and ensure theOverview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal EstateElectronics

Micro Devices
ProfileNew Japan Radio Co., Ltd. / Ricoh Electronic Devices Co., Ltd.
In the micro devices business, part of the electronics business segment, New Japan Radio Co., Ltd.
supplies analog semiconductors, SAW filters* and other electronic devices and microwave products.
It also supplies components for communications satellites, devices for smartphones and products forautomotive and industrial machinery applications, demand for which is growing. Ricoh Electronic
Devices Co., Ltd. became part of the Nisshinbo Group in March 2018.

Net Sales

New Japan Radio
Ricoh Electronic Devices

16.3

17.3

18.3

47,817

48,86551,665———47,817

48,86551,665

Segment Profit

New Japan Radio

Total

18.3

3,127

1,792

2,138

—

—

—

3,127

1,792

2,138

The company is focused on power management integrated

In the fiscal year ended March 2018, the micro devices business

In automotive applications, the shift to customized devices has

and high-performance CMOS analog semiconductors. Ricoh Elec-reported net sales of ¥15,665 million, up 5.7% year on year, andgathered pace in recent years. New Japan Radio, with its inte-tronic Devices has one of the best track records in the industry

segment income of ¥2,138 million, up 19.3%.

grated in-house system covering device design through tofor PMICs used in smartphones. We aim to reinforce our business

manufacturing, has benefited from that trend, seeing growth inin automotive and IoT applications and a wide range of othercations equipment fell sharply due to an inventory correction inorders from automakers and Tier 1 parts suppliers. In 2016, we

markets by combining New Japan Radio's bipolar technologies

the Chinese smartphone market. However, sales of automotive

established a subsidiary in Frankfurt, Germany to win businesswith Ricoh Electronic Devices’ CMOS technologies.

devices were firm, mainly driven by orders from domestic

from automakers and suppliers in Europe, and we expect ourcircuits (PMICs), supplying a range of compact, energy-efficient

We are also targeting major synergies in manufacturing

customers. Demand was supported by the growing shift toautomotive device business to become increasingly international

through a collaborative relationship that reinforces the companies’

electrification in the automotive sector, which is leading to anin the years ahead. In industrial machinery applications, we see

respective positions in front-end and back-end processes*2.

increase in the number of electronic components per vehicle.

good prospects for strong growth in sales, mainly supported by

Sales of devices for industrial machinery were also strong,rising investment in industrial robots in China. In the fiscal yearof Nisshinbo Holdings on September 1, 2018. The move willreflecting rising orders from machinery manufacturers in Japan,

ended March 2018, demand for MEMS*1 devices for smartphoneenable faster and more dynamic decision-making and investment

which are benefiting from buoyant capital investment in China.

applications declined, but devices for AI-powered speakers are adecisions, helping to accelerate the Group’s growth and increasepromising growth market. In microwave products, there is a

its competitiveness.

firm demand for communication satellite components fromgrowing need for Internet environments accessed via satellite,*1 Micro-electro-mechanical systems: small devices made using semicon-

customers in the US, China, India, Korea and Israel, reflecting

which is likely to sustain strong demand for microwave devices

solid demand for satellite communication equipment used inused in communication satellites.

Sales of microwave devices increased sharply on the back of

We plan to make New Japan Radio a wholly owned subsidiary

ductor fabrication technology*2 See pages 44-45 for more details about the potential synergies

The acquisition and consolidation of Ricoh Electronic Devices

Sales of microwave tubes for marine radar systems were sup-is set to lift sales sharply in the segment’s micro devices business.

between New Japan Radio and Ricoh Electronic Devices.

ported by firm repair and maintenance demand.
In March 2018, Nisshinbo Holdings Inc. acquired 80% of
Nisshinbo Group. From the fiscal period ending December 2018,

Main Locations
Key Companies

New Japan Radio and Ricoh Electronic Devices will be responsible
for the newly established micro devices business. Assets andliabilities held by Ricoh Electronic Devices were included in theearnings will be reflected in consolidated results from the fiscal

Location

Kawagoe Works

Fujimino, Saitama Prefecture

Electronic devices, microwave
products

Saga Electronics Co., Ltd.

Kanzaki, Saga Prefecture

Electronic devices, microwave
products

NJR Fukuoka Co., Ltd.

Fukuoka, Fukuoka Prefecture

Electronic devices, microwave
products

THAI NJR CO., LTD.

ThailandElectronic devices, microwave
products

Yashiro Plant

Kato, Hyogo Prefecture

Electronic devices

New Japan Radio Co., Ltd.

period ending December 31, 2018.

Ricoh Electronic Devices Co., Ltd.

42

Main Products and Services

43

Financials

consolidated balance sheets as of March 31, 2018. The company’s

Main Locations and Key Subsidiaries

Management Framework

marine applications and trunk line applications for base stations.

shares in Ricoh Electronic Devices, making it a subsidiary of theBusiness Segments

Ricoh Electronic Devices

17.3

Business strategies for the fiscal
period ending December 2018

In mainstay electronic devices, sales of devices for communi-(millions of yen)

16.3

Summary of financial results forthe fiscal year ended March 2018

Special Feature

Total(millions of yen)

Strategy

High-quality operational
amplifier for high-end audio
equipment* Surface Acoustic Wave filters: used in smartphones and other communication devices

Overview of Business Segments

Electronics

Micro Devices Business Strategy
Guided by its corporate slogan, Challenging towards a New Era of Technological Innovation & Super
Smart Society, the Nisshinbo Group is pursuing innovation in a wide range of fields. New Japan Radio
Co., Ltd. leads the Group’s efforts in electronic technologies. Our analog chips, which include a range

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

In industrial equipment, we are seeing an increase in the

back-end processes means Ricoh Electronic Devices no longer

number of sensors used in control equipment and industrial

needs to outsource that work, which should help reduce costs

robots, spurred by factory automation and the adoption of IoT.

by keeping chip fabrication processes in-house. By switching toJapan’s industrial equipment manufacturers have a high share of

in-house production and encouraging closer cooperation,

the market and we have business relationships with almost all

I’m confident we can lower costs and establish a robust quality

those companies.

assurance system – a vital step in expanding our automotive-related
business. We also plan to take advantage of advanced designof microscopic sensors, are needed for new products being developed by businesses across theand development resources at Ricoh Electronic Devices to

Nisshinbo Group. In March 2018, Ricoh Electronic Devices Co., Ltd. became part of the Group. We planchip package facility, which will be operated by subsidiary Sagadevelop new electronic devices for automotive and industrial

Electronics Co., Ltd. The facility is scheduled to start production

applications. We have been business partners with Ricohas early as 2020.

Electronic Devices for more than 30 years and the company* Start of production

will now play a key role in implementing our business strategy.

New Japan Radio can provide one-stop solutions to clients.

Synergies with Ricoh Electronic Devices

In the automotive field, where demand for customized chip

The consolidation of Ricoh Electronic Devices has lifted sales in

New Japan Radio to Become Wholly Owned
Subsidiary of Nisshinbo Holdings

designs is growing, we are highly regarded by automakers,

the Group’s micro devices business to around ¥80 billion. Third

We have agreed to make New Japan Radio a wholly owned

helping us to secure major orders.

place in the global market is now within sight and we plan to

subsidiary of Nisshinbo Holdings Inc., effective September 1,

to generate synergies with the company to support Nisshinbo’s continued growth in the electronics field.

ProfileTo address rising demand for automotive and industrial
equipment applications, New Japan Radio plans to build a newwhich convert analog signals to digital outputs. That lineup,along with our strengths in chip packaging technology, means

flexible decision-making and investment decision processes.

rising steadily. The time needed to develop and launch electronicon energy-efficient, high-performance power management

We also have to create a framework that allows us to tap thedevices differs depending on the final application, whether IT,

integrated circuits (PMICs) and is one of the top suppliers for the

Nisshinbo Group’s highly skilled personnel and extensive

industrial or automotive. That means we need separate

smartphone sector. New Japan Radio has a strong position in theexpertise to help us grow our business in the automotive anddevelopment teams for each type of product.

automotive and industrial equipment markets, so there is minimalindustrial equipment fields. For example, Japan Radio Co., Ltd.

overlap in business fields. We plan to draw on our combined

has a portfolio of fundamental wireless and communications

strengths in all fields to reinforce our business. The acquisition

technologies, which is something we lack. By stepping up

has also expanded the Group’s capabilities in chip production,communication with other divisions in the Nisshinbo Group, we

Vehicles and industrial equipment are our two most promisingwith Ricoh Electronic Devices specializing in front-end chip

aim to create a steady stream of new products and businesses

growth markets. In the automotive field, there is a growing shift

fabrication processes and large-diameter wafer processing.

in the advanced driver assistance systems (ADAS) field and in

The global analog semiconductor market is worth around ¥4

to electronic systems, which is leading to an increase in the num-

New Japan Radio’s presence in chip testing, assembly and otherthe medical & healthcare field.

trillion and the market for our main analog chips is worth about

ber of electronic sensors per vehicle. Suppliers and automakers¥1 trillion. With the acquisition of Ricoh Electronic Devices, thetypically start working together on new automotive components

Nisshinbo Group now has one of the leading market shares inseveral years before they are used in vehicles, and we are

Japan and ranks around fourth worldwide.

currently developing new products with an SOP* date of 2021. In

Ryo OguraPresident
New Japan Radio Co., Ltd.

Two Promising Growth Markets
The Nisshinbo Group’s Market Position

New Japan Radio has leveraged its strong industry position

2016, we set up a new office in Germany as our first move into

in signal processing-related devices. We have built an extensive

the European auto market. We plan to increase our presence inproduct range that includes sensors, amplifiers and AD converters,

Europe going forward.

How Analog Semiconductors Work (signal processing chips)
Signal processing
SensorAnalog-to-digitalconverter

Operational
amplifierMicro controller unitR

icoh Electronic Devices has a strong position in compact,with New Japan Radio by collaborating in manufacturing, aiming

energy-efficient PMICs, with one of the highest shares into raise the operating margin to over 10% by 2020.

the smartphone market. By joining the Nisshinbo Group,

The Nisshinbo Group has positioned electronics as a growth

we will be able to work more closely with New Japan Radio, whichbusiness. We will play our part by making necessary and timely

also has a range of analog semiconductor technology. But we areinvestments to grow our business in order to further strengthen

also excited about the prospect of new growth opportunities inour presence in the analog semiconductor market.

application fields such as vehicles, communication and healthcare.
For example, we can now offer a wider choice of solutions toclients by combining the Nisshinbo Group’s sensors and communication modules with our own low-power PMICs.

DetectAmplify

Digitize

Satoru Tajiequipment fields, which offer prospects for sustained growth. Our

President
Ricoh Electronic
Devices Co., Ltd.

goal is to increase the ratio of automotive sales from around 10%
now to about 20% by around 2020. We will also seek cost synergies

Electrical signal flow

44

45

Financials

Going forward, we plan to focus on the automotive and industrial
01010

Management Framework

our device design capabilities. Ricoh Electronic Devices is focused

Business Segmentschanges in the operating environment by creating faster, moreincreasingly popular, shipments of MEMS microphones are

Special Feature

2018. We believe the move is vital to help us respond to rapid

see significant potential for cost synergies and improvements to

New Japan Radio supplies MEMS microphones for smart-

Strategy

increase sales to ¥100 billion. In addition to growing sales, wephones and other products. With AI speakers becomingOverview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

Automobile Brakes
ProfileNisshinbo Brake Inc. / TMD Friction Group S.A.
Nisshinbo is a global supplier with world-class development capabilities in the field of friction materials, which are key components in automobile brake systems. Our strategy in the automobile brakes
business is to address the specific requirements of each market and customer with three businesses

Disc pads— Nisshinbo Brake, TMD Friction Group and Saeron Group — aiming to meet global automaker needsfor optimum parts procurement as the world’s leading friction materials company.

In China, our new manufacturing subsidiary, Saeron Automo-

Net Sales(millions of yen)

16.3

17.3

18.3

NISB* —Domestic

25,272

25,05825,134NISB —Overseas

45,69940,50944,49399,78786,42392,518Eliminations(5,721)(5,929)(7,941)

165,037

146,062

154,205

Total

Segment Profit

after comprehensively assessing its prospects based on thecustomers in the aftermarket due to mergers between someGroup’s growth strategy and the growth potential of the businesscustomers. In response, TMD plans to reinforce its brands andIn the fiscal year ended March 2018, the automobile brakes

in the Nisshinbo Group.

improve operating efficiency, such as completing the integration

business reported net sales of ¥154,205 million, up 5.6% year on* Established with investment from two Nisshinbo Group consolidatedof production sites in Germany. TMD Brazil also completed its

year, and segment income of ¥6,119 million, an improvement ofsubsidiaries (Saeron Automotive Corporation 90% stake, Saeron¥6,126 million from the previous fiscal year. Amortization ofAutomotive Beijing Co., Ltd. 10% stake)move to a new plant in 2017.
As one of the first in the industry to develop copper-reduced

goodwill related to the acquisition of TMD was completed in theprevious fiscal year, supporting the sharp rise in profits.

ending December 2018, we plan to sharply increase output ofyear on year due to a pickup in new car sales, with sales volumes
for light vehicles recovering from the impact of the fuel economy

Domestic car sales are likely to be flat in 2018 as the impact offeedback to further improve quality and increase market share.

data scandal in the previous year. However, changes in the

new models drops out. We expect car sales to continue rising in

product mix and other factors pushed profits down year on year.

Thailand and China, but demand in the US, Europe and Southhybrids and fuel cell vehicles, we plan to improve the NVH*3

In the US, profits and sales both declined amid peaking demand

Korea is likely to be close to the level in the previous fiscal year.

performance of our friction materials and develop products thatthe new friction materials, while also using detailed market
To address the growing popularity of electric vehicles, plug-in

17.3

NISB —Domestic

1,142

1,486

870

NISB —Overseas

5,722

5,045

4,492

The picture was similar in South Korea, where a drop in new car

start work on fundamentally overhauling its production activities.

sales led to weaker sales and profits. However, sales and profits

Specifically, we plan to install production lines that combine

on copper content, is projected to increase worldwide. US environmen-

increased in Thailand on the back of strong car sales and themultiple manufacturing processes, introduce computer-controlled

tal regulations, effective from 2021, prohibit the sale of new friction

launch of new products. Sales and profits also rose in China.

raw material mixing systems, and use IoT technologies to visualizematerials or vehicles fitted with friction materials that have a copper

Nisshinbo Brake teamed up with TMD in 2016 to begin aftermar-

conditions on production lines, allowing us to better predict issues

content of more than 5%. From 2025, the limit on copper content will

ket sales in some areas of the Middle East. We have sinceand maintain equipment. The project, which is scheduled for

TMD

1,725

2,068

2,920

Goodwill amortization(6,576)(5,921)—

TMD (Adjustment forJapanese accounting
standard)(2,899)(2,540)(2,726)

Consolidation
adjustments
Totaland a rising share of SUV sales in the North American car market.

Against that backdrop, Nisshinbo Brake’s Tatebayashi Plant will

extended our presence in the aftermarket to all parts of thecompletion in 2020, will reduce lead times, save labor and cut CO2

—

(145)

563

Middle East and also launched sales in major countries in Africa.

emissions through improvements in energy efficiency.

(887)

(7)

6,119

which also helped the company move into profit. TMD is aggres-are ideally suited to electronically controlled brake systems.
*1 Demand for these products, which are compatible with US regulations

be reduced to 0.5%.
*2 Non-Asbestos Organic*3 Noise Vibration Harshness

Higher sales of aftermarket products lifted sales at TMD,
sively expanding its operations. The company has recently* Nisshinbo Brake Inc.

opened new sales offices in Russia, Poland and Singapore,

Main Locations
Key Companies

Main Products and Services
Automobile brake friction materials

Nisshinbo Automotive Manufacturing Inc.

U.S.A.

Automobile brake friction materials

Saeron Automotive Corporation

South Korea

Automobile brake friction materials

Nisshinbo Somboon Automotive Co., Ltd.

Thailand

Automobile brake friction materials

Chinese market. The company will fix the Group’s lack of produc-

Saeron Automotive Beijing Corporation

China

Automobile brake friction materials

tion capacity and strengthen Nisshinbo’s presence in China.

Nisshinbo Saeron Changshu Automotive Co., Ltd. China

Automobile brake friction materials

TMD Friction GmbH

Automobile brake friction materials

new distribution center in Lithuania.
In July 2017, we established Saeron Automotive Yantai Co.,
Ltd. as a new manufacturing subsidiary in the fast-growing

Also, we sold our foundation brakes business in April 201846

Main Locations and Key Subsidiaries
Tatebayashi Plant

Nisshinbo Brake Inc.

TMD Friction Group

Germany, etc.

47

Financials

Location
Ora, Gunma Prefecture

moved into a new distribution center in Germany and opened aManagement Framework

16.3

Business Segments

18.3

volume production of NAO*2 materials. In the fiscal periodBusiness strategies for the fiscal
period ending December 2018

In Nisshinbo Brake’s domestic operations, sales increased(millions of yen)

and copper-free friction materials*1, Nisshinbo Brake has started

Special Feature

TMD

As a supplier, TMD faces tougher price negotiations with

Summary of financial results for the
fiscal year ended March 2018

Strategy

tive Yantai Co., Ltd., is working to start volume production in 2019.

Overview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

Precision Instruments
Utilizing various areas of expertise accumulated over more than 70 years, this segment focuses on

ProfileAutomotive EBS
valve block

Nisshinbo Mechatronics Inc.
plastic products, mainly for the home appliance and automotive sectors, and precision parts processing,primarily metal processing for the automotive sector. The segment also makes customized production
equipment to meet the specific needs of customers. We are working closely with Nanbu Plastics Co.,
Ltd., which became a subsidiary in 2015, to develop these businesses globally, centered on Asia.

(millions of yen)

17.3

18.3

Mechatronics

14,283

14,996

15,370

Plastic products

18,46449,081

52,203Eliminations(3,222)(3,390)(2,655)

Total

29,52560,68764,918Segment Profit

(88)

808

while Nisshinbo Mechatronics (Shanghai) Co., Ltd. will look atbusiness reported net sales of ¥64,918 million, up 7.0% year on

optimizing production activities, including in southern Guangzhou.

year, and segment profit of ¥1,725 million, an increase of 64.4%.

Nisshinbo Mechatronics (India) Pte. Ltd. will expand its operations

In precision parts processing, sales and profits rose year onin response to market growth, aiming to increase market share

909

Plastic components for
air conditioners

and lift profits.

Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd.,

Nanbu Plastics will work to generate greater synergies witha joint venture with Continental Automotive Holding Co., Ltd.

the Nisshinbo Group, using a new business site on the premises

Sales and profits also rose year on year in plastic products,

18.3

Nisshinbo Mechatronics (Thailand) Ltd. aims to improveof Nisshinbo Precision Instrument & Machinery Hiroshima Corp.

driven by increased orders at subsidiaries in China and India andto carry out production activities closer to product supply

demand in the Chinese and Indian markets. The company plansby higher orders for automotive products and cost savings at

destinations. Also, automotive products developed jointly byto build a manufacturing framework with annual production

Nanbu Plastics. Our subsidiary in India moved to a new plant in

Nanbu Plastics and its customers will be made by Nisshinbo

capacity of 10 million units by 2020, while also maintaining and2017 and is now contributing to consolidated profits by leveraging

Mechatronics (Thailand), which will then supply them to local

improving quality.

the merits of the new facility. Also, at our existing site in Thailand,customer sites in Thailand.

Plastic products

448

1,204

1,706

Eliminations

(42)

(964)

(891)

we constructed a new plant that is set to start operations in

We forecast firm earnings in the precision instruments

Total

318

1,049

1,725

2018. We plan to use the plant to win more orders and boost

business segment, supported by growth in the automotive

December 2018, but the business will also work to secure orders

profit margins.

market. Nisshinbo-Continental Precision Machining (Yangzhou)

from users in the Nisshinbo Group, helping to improve manufac-

continues to increase output of EBS valve blocks to meet rising

turing technologies across Nisshinbo businesses.

machines increased and costs were reduced, but sales andprofits both declined year on year due to weaker orders foraftermarket services.

Main Locations
Key Companies

Business strategies for the fiscal
period ending December 2018
In the precision instruments business segment, our main target
markets are home appliances and automotive applications.
framework, as our main customers — leading Japanesemakers of air conditioners — continue to expand theiroperations worldwide.

Main Products and Services

Miai Machinery Plant

Okazaki, Aichi Prefecture

Plastic products,
automotive precision parts

Hamakita Plant

Hamamatsu, Shizuoka
Prefecture

Automotive precision parts

Nisshinbo Precision Instrument & Machinery Hiroshima Corp.

Higashihiroshima, Hiroshima
Automotive precision parts
Prefecture

Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd.

China

Automotive precision parts

Nisshinbo Mechatronics (Shanghai) Co., Ltd.

China

Plastic products

Nisshinbo Mechatronics (Thailand) Ltd.

Thailand

Plastic products

Nisshinbo Mechatronics India Private Limited

India

Plastic products

Shizuoka Prefecture, etc.

Plastic products

Nanbu Plastics Co., Ltd.

48

Location

49

Financials

In plastic products, we need to build a global production

Nisshinbo
Mechatronics Inc.

Main Locations and Key Subsidiaries

Management Framework

In customized production equipment, orders for customized

In customized production equipment, the machine tool
market is likely to remain buoyant in the fiscal period ending

Business Segments

Mechatronics

17.3

In the fiscal year ended March 2018, the precision instruments

year, supported by higher sales in Japan and increased output at(millions of yen)

16.3

productivity and increase orders using its newly constructed plant,

Special Feature

16.3

Summary of financial results for the
fiscal year ended March 2018

Strategy

Net SalesOverview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

ChemicalsProfileNisshinbo Chemical Inc.
Drawing on a broad base of expertise and intellectual property in the chemical field, this segment is pushingahead with the development of environment-related products on a global basis, such as actively switching tomaterials with low global warming potential in its mainstay thermal insulation products. Our environment- andenergy-related products include bipolar plates for fuel cells and Carbodilite, a high-performance plastic material
that increases the durability of biodegradable plastics and waterborne resins, which have minimal environmental

Net Sales(millions of yen)

17.3

18.3

Fuel cell bipolar plates

1,166

1,040

1,310

Carbodilite

1,834

2,248

2,466

Thermal insulation
products

4,982

6,083

Others

984

701

873

Subsidiaries

644

631

704

(108)

(121)

(151)

Total

8,285

9,483

11,285

Segment Profit(millions of yen)

16.3

and marketing for Carbodilite, fuel cell bipolar plates, bio-carriers

and segment profit of ¥2,112 million, up 61.3%.

for wastewater treatment and glass-like carbon products.

(107)

578

for waterborne resins and as a biodegradable plastic modifier.

engineering applications, as well as for bio-carriers for wastewater

Over the medium and long term, we also see prospects for growthtreatment and refrigeration panels for LNG carriers. In bio-carriers,

in Carbodilite demand in the waterborne resin field for applications

demand is growing in China on the back of tighter environmental

such as automotive coatings, heavy-duty anti-corrosion coatings

regulations, which is spurring adoption in distributed wastewaterand ink. Meanwhile, more countries, particularly in Europe, aretreatment (the Japanese approach to water purification).

introducing restrictions on the use of non-biodegradable plastics.

Sales of functional chemical Carbodilite increased year on

Carbodilite is currently manufactured at our Tokushima Plant,

treatment, an approach that China’s water sector is starting toyear, supported by higher sales of products used as a cross-linking

but we are looking at expanding production at overseas sites in

adopt. Our goal is to increase sales by building a local production

agent*1 for waterborne resins. As a result, sales in this businessthe future.

and sales network. We are also targeting opportunities related to

Others

18

689
137

major public-sector sewage treatment projects by conducting

In fuel cell bipolar plates, we are targeting wider adoption infield testing with public water companies.

about Carbodilite from potential customers in Japan and overseas,

the fixed fuel cell market by tapping into rising interest among

255

particularly for use as a safe, environmentally friendly waterborne

fuel cell manufacturers, in addition to existing residential fuel cell

In glass-like carbon, we forecast higher sales of plate627

cross-linking agent and as a biodegradable plastic modifier*2.

applications. With Nisshinbo Holdings Inc. now responsible for

products amid rising demand, which is being driven by thedeveloping fuel cell bipolar plates for fuel cell vehicles, all theshift to high-performance semiconductors such as processors

for residential fuel cells and fixed fuel cells supported growth inGroup’s resources are being used to drive adoption in the auto-and memory devices. In coated products, we anticipate

sales and profits.

motive sector.

increased demand for glass-like carbon molding tools, which

In fuel cell bipolar plates, cost reduction and higher shipments
507

Carbodilite

845
264

In glass-like carbon products, orders increased due to contin-

In bio-carriers for wastewater treatment, we plan to cultivate

ued strong demand in the semiconductor and OLED panel market.

closer links with Chinese manufacturers in distributed wastewater

Subsidiaries

97

74

118

Eliminations

1

0

1

753

1,309

2,112

are used to make curved glass screens for automotive displays
and smartphones.

Management Framework

236

(169)

We aim to increase sales of Carbodilite as a cross-linking agent

higher demand for insulation base solution for spray-on and civilreached a record high. We are receiving a high level of inquiries

18.3

17.3

Thermal insulation
products

Total

The chemicals business will continue to step up development

reported net sales of ¥11,285 million, up 19.0% year on year,

Business Segments

Eliminations

Carbodilite

In the fiscal year ended March 2018, the chemicals businessIn thermal insulation products, sales increased on the back of
3,765

Fuel cell bipolar plates

Business strategies for the fiscal
period ending December 2018

Special Feature

16.3

Summary of financial results for the
fiscal year ended March 2018

Strategy

Fuel cell bipolar plates

impact. We are investing management resources in these promising growth areas as a matter of priority.

*1 Cross-linking agent: A chemical compound that links polymers,changing the physical and chemical properties of materials.
*2 Modifier: Additives that improve the properties of plastics, such

Main Locations
Key Companies

Nisshinbo Chemical Inc.

50

Main Locations and Key Subsidiaries

Location

Main Products and Services

Toke Plant

Chiba, Chiba Prefecture

R&D Center (Carbodilite)

Asahi Plant

Asahi, Chiba Prefecture

Urethane products, fine carbon products

Tokushima Plant

Tokushima,
Tokushima Prefecture

Carbodilite

Chiba Plant

Chiba, Chiba Prefecture

Carbon bipolar plates for fuel cells

51

Financials

as durability.

Overview of Business Segments

Electronics

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

TextilesProfileNisshinbo Textile Inc.
Since its founding in 1907, Nisshinbo has led the Japanese textile industry with its state-of-the-art
technologies and high quality. Nisshinbo subsequently expanded its business globally in the fields ofspinning, weaving, processing and sewing, and today possesses some of the world’s most advanced

Oikos

technologies in product development and production. Nisshinbo is currently working to increase
global sales of the APOLLOCOT brand by mobilizing its sophisticated textile processing technologies.

APOLLOCOT
Strategy

Net Sales(millions of yen)

17.3

18.3

Nisshinbo Textile

23,41020,935

19,519Japanese Subsidiaries

31,88429,271

27,868In the textiles business, we aim to win more orders for our

We are also carrying out research and development into

custom-made uniforms in the durable workwear market. We will

anhydrous dyes, formalin-free processing and non-starch textile

In the fiscal year ended March 2018, the textiles businessalso focus on securing orders for service sector uniforms.

manufacturing, which all have the potential to significantly reduce

reported net sales of ¥54,640 million, down 2.2% year on year,
and segment profit of ¥1,876 million, up 5.5%.
In the domestic market, demand for wrinkle-free shirts

In denim fabric, we aim to achieve global cost-competitiveness by increasing production capacity at our joint venture in

3,886

4,488

5,400

Indonesia

14,701

13,60913,653of APOLLOCOT shirt fabric. Sales of work uniform fabric, inner-

In the materials development business, we are targeting

China

2,459

2,125

2,438

wear spandex and hot-melt film for clothing increased, but sales

higher sales of high-value-added products made from distinctive

and profits in domestic operations declined overall due to weakmaterials, such as non-woven fabric for face masks andsales of denim fabric and poor sales at TOKYO SHIRTS CO., LTD.

low-temperature thermal adhesive fiber for stitchless clothing.

(16,210)(14,586)(14,239)

Total

60,12755,84254,640

Segment Profit(millions of yen)

16.3
Nisshinbo Textile

291

18.3

17.3
469

314

1,321

895

Brazil

105

132

555

Indonesia

328

213

322

China

(10)

6

39

Eliminations

(317)

(364)

(250)

Total

1,779

1,777

1,876

In product development, we plan to leverage the strengths ofsubsidiary for supply to third countries and regions, such as thethe Nisshinbo Group’s electronics business to develop smart

US, Europe and the Middle East, fell short of their target, but

textiles with embedded sensing capabilities. We intend to work

sales of products for the Japanese market were firm. Sales

closely with Japan Radio Co., Ltd. and New Japan Radio Co., Ltd.

increased at our Brazilian subsidiary amid a decline in inventories

to create textiles for two main themes — monitoring services

in retail channels. The company’s price hikes also took hold,and better workplace environments.

lifting profitability. Overall, there was a notable improvement in
performance at the Brazilian subsidiary.
Main Locations

Business strategies for the fiscal
period ending December 2018

Key Companies

Main Locations and Key Subsidiaries

Location
Fujieda, Shizuoka Prefecture

Developed materials

Tokushima Plant, Yoshinogawa Plant

Tokushima Prefecture

Developed materials, denim products

shirt fabric, centered on APOLLOCOT, the leading easy-care shirt

PT. Nikawa Textile Industry

Indonesia

Textile spinning and weaving

PT. Nisshinbo Indonesia

Indonesia

Textile weaving and dyeing

Nisshinbo Do Brasil Industria Textil Ltda.

BrazilTextile spinning

Nisshinbo (Shanghai) Co., Ltd.

China

Textile productsTOKYO SHIRTS CO., LTD., Naigai Shirts Co., Ltd.

Tokyo etc.

Dress shirts

In Indonesia, our main production region, we will continue
to implement the Nisshinbo Textile group’s companywide
improvement program called T-KAIZEN to achieve our goal of
global cost-competitiveness and global quality. We will also

Nisshinbo Textile Inc.

work to boost sales of products to the US, Europe, the Middle
East and other third countries and regions.

53

Financials

Fujieda Plant

In the shirt business, we will work to grow sales of wrinkle-freefabric in the textile sector.

52

Main Products and Services

Management Framework

1,381Japanese Subsidiaries

Overseas, sales of products made by our Indonesianto strengthen and expand the denim business.

Business Segments

Eliminations* A joint venture with Indonesian denim maker PT. Malakasari.

Indonesia, PT. Malakasari Nisshinbo Denim Industry*, in order

Brazilremained firm throughout the fiscal year, supporting strong sales

environmental impact in the natural textile manufacturing sector.
Special Feature

16.3

Summary of financial results for the
fiscal year ended March 2018

Overview of Business Segments

Real Estate
ProfileNisshinbo Holdings Inc.
Nisshinbo’s real estate business redevelops properties that have become vacant as a result of businesschanges at Group companies. Income from those activities is used to fund the Group’s growth strategy,
such as launching new businesses and expanding global operations. Income is generated from two
main sources — property leasing and the sale of housing lots. Nisshinbo has actively developed the
housing lot sales business since 2009, when the Group moved to a holding and operating company

Management Framework

locations, generating strong earnings for the real estate business.

Financial Results

effectively utilizing the real estate assets of the whole Group.

(millions of yen)

17.3

18.3

8,358

8,084

8,406

Segment Profit

5,795

5,811

5,067

the following projects.
Plans for the redevelopment of the north section of theformer Japan Radio site in Mitaka (Tokyo) include the sale ofaround 680 condominium units in 2020 and 2021. Groundwork

President and Outside Director Dialogue

60

Board of Directors, Audit & Supervisory Board Members

		and Managing Officers

62

Corporate Governance

66

Risk Management

67

Compliance

Special Feature

16.3
Net Sales

We plan to continue generating stable earnings by focusing on

56

for the condominium started in March 2018.

Summary of financial results for the
fiscal year ended March 2018

Strategy

structure. The Group’s domestic real estate portfolio includes many land and property sites with excellent

At the former Miai Plant site (Aichi), we plan to sell around360 detached homes and land for commercial, medical andwelfare facilities between 2019 and 2024. Land redevelopment

reported net sales of ¥8,406 million, up 4.0% year on year, andis now under way.

segment profit of ¥5,067 million, down 12.8%.

Business Segments

In the fiscal year ended March 2018, the real estate businessWe plan to complete the sale of the remaining four lots at

In the property leasing business, leasing operations were

Kawagoe and the remaining two lots at Okazaki in the fiscal

firm for land, office buildings, commercial facilities and otherperiod ending December 2018.

properties, but sales and profits both declined due to the disposalof a large commercial facility in Nagoya. The sale of the property

Management Framework

resulted in a gain on the sale of property, plant and equipment of¥5,163 million, which was reflected as other income in theGroup’s consolidated results.
In the housing lot sales business, we continued to sell
housing lots at sites in Kawagoe (Saitama) and Okazaki (Aichi)
and we started selling lots in the north section of the former
Japan Radio Co., Ltd. site in Mitaka (Tokyo), helping to lift sales
year on year. However, profits declined due to the completion ofsales at the former Nagoya Plant site (Aichi), where margins on
housing lots were high.

Financials

Business strategies for the fiscal
period ending December 2018
The real estate business will continue to fulfill its role as a sourceof funds to help Nisshinbo attain its management targets by
54

55

President and Outside Director Dialogue

women to the board. However, as our first female director,
Ms Fujino’s impact has been considerable. It's vital that we draw
on the unique perspectives of women, as men-only discussions
about workstyle reforms and empowering women in the workProfile

place are not useful. I personally have benefited from Ms Fujino’s
input, one example being when she checked with me to ensure
there was sufficient female representation at workshops foryoung Nisshinbo employees. We plan to increase and offer
better opportunities for women to advance their careers. As wellas her role on the Board of Directors, Ms Fujino is active in many
Kawata: Society is split equally between men and women, but

her on that issue.

men often outnumber women at Japanese companies, particularly
in management positions, which tend to be dominated by men.
That’s an issue that needs to be addressed. Some of the products

Diversity in the Nisshinbo Group

Masaya Kawata

Outside Director

President

Career Counselor*

Nisshinbo Is Entering a New Era

developed by the Nisshinbo Group are specifically targeted at

Fujino: The Nisshinbo Group is also steadily stepping up its

female consumers, such as textile products. It’s especially

support for women’s careers, such as encouraging female

important to ensure our female employees are involved in theemployees to take part in Management Policy Meetings.

development of those products.

The next step is to promote women to management roles andWe publicly disclose targets such as the ratio of womenhigher positions. Many women already have frontline leadership

we are aiming for in management positions, but leaders in allroles in Nisshinbo’s businesses. We now need to help themour departments and divisions, not just staff in personnel

advance their careers by improving personnel systems anddepartments, need to fully understand the importance of having

workplace culture to create an even better working environment.

a diverse workforce. My aim is to raise the presence of womenThat will take time, but we have to stay firmly committed to ouracross the company, such as increasing representation at

objective over the medium and long term.

meetings and encouraging more women to lead presentations.
That will depend on increasing the number of women in leadership
positions, which will take time. In scientific and engineering fields,

ultimately end up with consumers. It’s important to remember

we face the issue of low numbers of female graduates in thethat our employees are also consumers too. To satisfy society's

job market. We are actively hiring mid-career female engineers

Masaya Kawata talk about the Group’s recent achievements and how Nisshinbo should adapt to thediverse needs, we have to draw on their diverse opinions in

to compensate for that shortage.

changing needs of society.

decision-making processes. That’s why we should promote

To improve the working environment for women in thediversity from the perspective of increasing corporate value,

Nisshinbo Group, we have increased networking opportunities

not because of wider public pressure.

for female managers at key companies and added more flexibility

Shinobu Fujino has served as outside director for three years since her appointment in 2015.
She is the Nisshinbo Group’s first female director. In this section, Ms Fujino and Nisshinbo’s president

to personnel systems.

Looking Back on the Last Three Years

I think discussions at board meetings have become more

We also have to create a corporate culture that values

Fujino: The Nisshinbo Group has a presence in a wide range ofeffective. Three years ago, meetings sometimes lasted untilhonest opinions between employees, regardless of age or gender,

business fields and proposals discussed by the Board of Directors

late in the evening. Now, meetings begin earlier and are notby making workplaces more diverse. Along with the Group’s

can be very detailed. When I first joined the board, I took plenty of

open-ended, helping to make discussions more productive.

common zero-tolerance policy on power harassment and sexual

time to ensure I was well-briefed before meetings. In the last

Management Frameworkthat supply products to other companies, but all our products

Business Segments

The Nisshinbo Group mainly runs manufacturing businesses

Special Feature

Shinobu Fujino

Strategy

other areas of the Company, so I look forward to working withharassment, we aim to create a corporate culture anchored by
Kawata: As a company that has traditionally appointed men tocompanies and facilities to gain a detailed understanding of thesenior management positions, Ms Fujino’s appointment to theGroup and its businesses. I now have a much better grasp ofboard is a highly significant step from the perspectives ofNisshinbo, but I continue to keep up to speed with developments,

promoting diversity in leadership and creating a more roundedas the Group is constantly changing due to frequent businesscorporate governance framework. Ms Fujino is Nisshinbo’s only

mergers and acquisitions.

female director at the moment, but we plan to appoint more

open-minded communication.
Financials

three years, I have also made a point of visiting many operating* Career counselors provide advice to people in companies, public agencies and educational institutions by accurately identifying their abilities and values tohelp them choose their best career path and develop as individuals.

56

57

Concrete Steps to Realize Our Vision
for Nisshinbo

learn from experience. We will continue to accumulate know-how,

Report was rated as excellent by the GPIF’s domestic external

Kawata: The key to rapidly enhancing the capabilities of ourlearning as we go along.

asset managers, showing that our efforts to communicate withstaff is to give them a kind of “intellectual trial by fire.” But thathas to come from hands-on experience, not from training alone.

Fujino: The Group needs to have a clear strategic direction to

PR capabilities going forward.

We see significant improvements in the capabilities of younger

year or so, the close links across the Group have become clearer,

ensure M&A strategy is effective. Nisshinbo is aiming to be an* Connected, Autonomous, Shared, Electric

employees who have been posted overseas, where they often

such as communication between Group companies and theEnvironment and Energy Company group. As well as implementing

focus on harnessing synergies between businesses.

an M&A strategy in line with that goal, Nisshinbo should define
its vision and narrative more clearly for internal and external
stakeholders to ensure accountability.

Kawata: Our aggressive M&A strategy over the last few years
has led to growth in the number of internal organizations andhave to manage teams of local employees. The connections
they make with local people and culture and their new-foundPromoting Employees to Support
Nisshinbo’s New Era

global perspective become important strengths in their careers
later on. We now have to work out how to cultivate that type of

Fujino: Business leaders in their 30s are no longer rare in

employee in Japan. We also plan to actively send promising

Japan, particularly at Internet firms and in other emerging

female employees to overseas positions, provided conditions

is that companies have to tackle environmental themes if they

industries. In contrast, people looking at Nisshinbo from theare safe, as part of our earlier-mentioned efforts to train andGroup’s workforce seems to change every year. The goal of ourwant to remain viable.

outside will probably see a traditional Japanese manufacturer

support female staff. It will take time to break down barriers in

M&A deals has been to create synergies to drive forwardwith a clear hierarchical structure. To support the Nisshinboorganizations at core Group companies, but as we move into

individual businesses and the Group as a whole, rather thanGroup’s new era, we need a much more flexible personnel

new business fields, we will create new companies and consider

simply add on more people and profits. In many cases, businesses

strategy, including measures to promote diversity. I have highappointing young, capable employees to lead them.

that seem to have little in common have uncovered areas ofhopes for younger employees, who have the unique insights

collaboration in surprising places. Identifying that potential

we need to address society's emerging needs and uncoverToday’s dialogue was very useful. Normal meetings of the Board

depends on innovative thinking and communication.

hidden business opportunities. We also have to rate ourof Directors are efficiently run, but we usually have to work

employees based on their unique skills and value, not only

through a large number of agenda points. I hope we can create

Fujino: In discussions at board meetings, it was clear to me thaton their work experience. To harness the Group’s potential,

more opportunities like this for detailed and wide-ranging conver-

M&A deals are now an indispensable part of business, but also

we should consider early promotions for promising leadershipsations with outside directors.

Special Feature

Kawata: Amid rising interest in ESG, the consensus worldwide

is more important than ever. In particular, the composition of theStrategy

personnel. That means lateral communication within the Group

that they are difficult to achieve. Speed and timing are key toProfileinvestors is paying off. We plan to continue enhancing our IR and

was that the Group had a strong vertical structure. But in the last

Fujino: When I joined Nisshinbo, one of my first impressions

candidates who can fill key management positions, in order tosuccessful deals, and although we can assess risk beforehand,

In the automotive field – one of the Group’s key businessareas – a concept called CASE* is gaining ground. As theuntil the deal has been finalized. We naturally conduct rigorous

concept becomes more widespread, we will see growing

due diligence, but the post-merger integration (PMI) process has

interest in environmental and energy issues driven by growth ina large impact on the extent of synergies generated after the

car sharing services, vehicle electrification and other trends.

deal closes. The Nisshinbo Group draws on its track record fromThe Nisshinbo Group will also step up the supply of environ-past deals, but it also needs to keep building up experience inmental and energy-related products by developing copper-freebusiness mergers.

friction materials, devices for fuel cell vehicles and otherFujino: I couldn't agree more. As an outside director, I lookaccelerate personnel development.

forward to offering more advice to the board.
Business Segments

there is no way of knowing for sure how well a company is doing

We have to avoid making decisions that are focused on

The Group has to review the outcomes of past M&A deals andshort-term gains and that are out of step with those trends.

Management Framework

automotive products.
Kawata: I agree. The PMI process is particularly important.

In that context, M&A deals that serve only to increase businessvolume are meaningless.
Japanese companies are seen as lagging behind theiroverseas counterparts in ESG, but I think that reflects a lack of
accountability and communication on our part. As the saying goes,“a word to the wise is enough.” Many countries overseas do
not have Japan’s so-called high-context culture, so Japanese

Financials

companies operating in the global market need to be more
explicit about communicating their strengths and goals.
That is part of what it means to be accountable to stakeholders.
Given those trends, I’m pleased to say that our 2017 Integrated

58

59

Board of Directors, Audit & Supervisory Board Members
and Managing Officers(As of June 28, 2018)

Board of Directors

Audit & Supervisory Board Members

ProfileYoichi Fujiwara
Director,*

1

Director,*

Takumi Ohmoto

Yo Kawakami*

Director and Managing
Executive Officer,

Director,

1

Shiro Manabe*

Vice President

Senior Executive Managing Officer

Masaya Kawata

Masahiro Murakami

Kenji Ara

Chief of Corporate Strategy Center

President, Japan Radio Co., Ltd.

Shikoku Chemicals Corporation* Outside Audit & Supervisory Board member

Managing Officers

Responsible for Property Management
Department

Strategy

President

President

Masaya Kawata*
Vice President

Senior Executive
Managing Officer

Kenji Ara*
Executive Managing
Officers

Director,

Director,

Director,

Executive Managing Officer

Executive Managing Officer

Executive Managing Officer

Ryo Ogura

Takayoshi Okugawa

Koji Nishihara

President, New Japan Radio Co., Ltd.

Chief of Business Support Center

Chairman, Nisshinbo Brake Inc.

Executive Managing Officer

Managing Officer

Managing Officer

Toshihiro Kijima

Kazunori Baba

Akihiro Ishizaka

Makoto Sugiyama

General Manager,
Business Development Division

President, Nisshinbo Textile Inc.

Senior Manager of Corporate
Strategy Department, Corporate
Governance Department andAutomotive Business Strategy
Department

Senior Manager of CSR Department,
Diversity Development Department,
Human Resources andAdministration Service Department
and Overseas Administration Service
Department

Managing Officer

Managing Officer

Managing Officer

Managing Officer

Yasuji Ishii

Toshihiro Masuda

Shuji Tsukatani

Akihiro Kamei

President, Nisshinbo Brake Inc.

President, Nisshinbo
Mechatronics Inc.

Senior Manager of Finance,
Accounting and IT Service
Department

President, Nisshinbo Chemical Inc.

Takayoshi Okugawa*
Koji Nishihara** Concurrent board member

Business Segments

Ryo Ogura*

Executive Managing Officer

Special Feature

Masahiro Murakami*

Management Framework

Director*

Director*

2

2

Director*

2

Tomofumi Akiyama

Noboru Matsuda

Yoshinori Shimizu

Shinobu Fujino

Chairman,
Fukoku Mutual Life Insurance Company

LawyerProfessor Emeritus at Hitotsubashi
University

Career Counselor*1 Representative director

60*2 Outside director

61

Financials

Director*

2

Corporate GovernanceNisshinbo believes it needs to increase corporate value over the medium and long term as an

Nisshinbo has appointed several outside directors andpolicy that could harm the interests of shareholders, the Company

Environment and Energy Company group by operating its various businesses based on the three key

outside audit & supervisory members. These outside appointments

will provide a clear explanation to shareholders about the necessity

principles in its Corporate Philosophy – Public Entity, Consistent Integrity and Innovation – and on

also sit on the Company’s voluntarily established Nomination

and rationale for the policy and follow the necessary procedures.

global business management and cash flow management. To achieve this, we are improving theCommittee and Remuneration Committee.
We have adopted this structure as we believe it ensures
operations are conducted in an appropriate manner. Under thisstriving to deliver quantitative growth in earnings and shareholder value, focusing on ROE to improvestructure, outside directors draw on their depth of experience

Appropriate Cooperation with Stakeholders
Other than Shareholders

profitability and placing importance on the share price in management decisions.

and expertise to monitor business management from an objective

As values shared by all officers and employees that serve as

and independent standpoint, while outside members and internallythe basis for corporate governance initiatives, the Company has

appointed standing members of the Audit & Supervisory Board

established the Nisshinbo Group Corporate Philosophy.

work closely with the Internal Audit Office.

The Company has also established the Business Conduct

By making rapid and bold decisions based on risk-taking in line with our management principles,
we are working to enhance management efficiency while ensuring transparency, improve accountability,
act ethically and build a stronger corporate governance structure founded on our Corporate Philosophy.

Guidelines of the Nisshinbo Group to define standards of behavior
expected of our executives and employees in six areas: compliance,

Corporate Governance Policy

Corporate Governance Structure

Securing the Rights and Equal Treatmentof Shareholders

We have formulated the Nisshinbo Corporate Governance Policy,

Nisshinbo has separated decision-making and oversight fromThe Company shall ensure that the exercise of minority shareholder

initiative to provide this guidance by themselves and constantly

which clearly states our basic thinking on corporate governancebusiness execution and adopted a managing officer system torights is not impeded and will take appropriate measures to fully

educate employees on compliance with these guidelines andand related initiatives. By steadily implementing the principles

reinforce those functions. By transferring responsibility for busi-

protect shareholder rights. The Company will implement various

widely disseminate them.

of the policy and revising and improving its content as needed,ness execution to managing officers and strengthening oversightmeasures related to communication with shareholders andwe aim to improve the effectiveness of governance and createby the Board of Directors, we are improving management

investors and ensure the appropriate operation of the Generala framework for rapid and bold decision-making that contributes

efficiency and transparency and creating an effective governance

Shareholders’ Meeting.

to sustained growth and increased corporate value over the

structure that will support the Group’s sustained growth andmedium and long term.

enhance corporate value over the medium and long term.

value. These cross-shareholdings are regularly assessed tointo account the convenience and accessibility of the informationand plans determined by the board.

determine the necessity of the holdings and the presence orfor the user, including high-value-added non-financial information.

absence of economic rationality. The results of the assessments

In addition, the Company shall disseminate information in English

are reported to the Board of Directors, which discusses the

such as by preparing English-language annual integrated reports.

Audit & Supervisory Board
Four Audit & Supervisory Board Members(including two outside audit &supervisory board members)

Appoint /Oversight

Discuss /ReportReportBoard of Management

Instruct

ReportAccounting audit

Audit

be performed after deciding in each individual case the purpose

Board members and managing officers, the Company hasof the holdings from the standpoint of raising the corporate value

appointed independent outside directors to the Remunerationof the Company and the relevant business partner.

Committee and the Nomination Committee, which are positioned
as advisory bodies of the Board of Directors.

In the event that the Company decides to implement a capital

Remuneration for Directors and Auditors (Fiscal year ended March 2018)
Classification<Audit functions>Managing Officers, Business Divisions, Group Companies

Directors

Managing Officers

Representative directors are appointed by resolutionsof the Board of Directors. As of June 28, 2018, thepresident and vice president were the Company’s two
representative directors.

As of June 28, 2018, the Company had 10 directors,
including four outside directors. The Board of Directors
is responsible for making decisions on importantmanagement matters and for monitoring the executionof duties by directors. Directors are appointed for
one-year terms in order to clarify management
responsibility each fiscal year.

Nisshinbo has adopted a managing officer system tospeed up decision-making for business execution andclarify operational responsibilities. As of June 28, 2018,
the Company had 14 managing officers, including fivewith dual roles as directors. Managing officers are also
appointed for one-year terms.

Total remuneration(Millions of yen)

Remuneration breakdown (Millions of yen)
Basic
Stock
Bonus
remuneration
options

Total numberof payees

Directors(Excluding outside directors)

170

133

7

29

7

Audit and Supervisory Board members(Excluding outside audit and supervisory board members)

32

32

—

—

2

Outside directors and outside Audit andSupervisory Board members

52

52

—

—

7

Notes: 1. Total maximum compensation
		 Directors: ¥400 million per year (Employee salaries of individuals simultaneously appointed as employee and director are not included in payments to directors. Directors arealso eligible to receive subscription rights to new shares as stock options, up to a maximum value of ¥40 million per year).
		 Audit & Supervisory Board members: ¥70 million per year
2. The Company had 10 directors and four Audit & Supervisory Board members as of March 31, 2018.

63

Financials

Representative Directors

62

and appointment process for directors, Audit & Supervisory

Nisshinbo has not adopted takeover defense measures.

Internal Audit Officer

ReportDiscusses business execution matters

Reappoint

Coordinate

Instruct

Representative Directors

Financial Auditors

Coordinate
Audit<Business execution functions>

Report

The exercise of voting rights related to cross-shareholdings shallManagement Framework

Nomination Committee
Remuneration Committee

Appoint / Dismiss

Appoint / Dismiss
Coordinate

Recommend

To increase the transparency and objectivity of the nomination

merits of continuing to hold the shares or selling them.

Business Segments

execution of duties by directors in accordance with audit policy

Special Feature

information. When disclosing information, the Company takes

Strategy

appropriately combining statutory disclosures with voluntary

deemed necessary from the standpoint of raising corporate<Decision-making and oversight functions>
10 directors (including four outside directors)

With respect to cross-shareholdings, the Company may hold

The members of the Audit & Supervisory Board monitor the

Appoint / Dismiss

AdviseEnsuring Appropriate Information Disclosure
and Transparency
The Company carries out active corporate communication by

General Shareholders’ Meeting

Audit

and procurement. Directors and managing officers take thestrengthening the business or alliance relationship, to the extent

Corporate Governance Structure

Board of Directors

the environment, human rights, workplace safety, product safety

shares of business partners with the goal of maintaining andNisshinbo has established an Audit & Supervisory Board.

Profilequality of corporate governance and other aspects of our organizational culture. In parallel, we areResponsibilities of the Board

that it will not interfere in their attendance of the Company’s

Directors and the Board of Directors recognize that they have a

Board of Directors meetings, Audit & Supervisory Board meetings,

an overview of the Company’s operating environment andtunity to visit business sites and attend business briefings.

fiduciary duty to shareholders and thus strive to appropriately

or their work.

current strategic direction, giving board members the necessary

In addition to board meetings, regular meetings are held between

background to discuss the subsequent agenda points. In theoutside directors, Audit & Supervisory Board members and thecase of highly specialist topics, outside directors are briefed

president. Board members are also required to attend twice-yearly

beforehand to deepen their understanding. Key statements

Management Policy Meetings with business managers andmade during meetings are recorded in the minutes, allowing

candidates for management posts, in order to deepen theirfor appropriate feedback.

understanding of the Group’s business activities.

reflect shareholders’ intentions within the board. By overseeing

Independent Outside Directors at Nisshinbo Holdings Inc.

the preparation and management of internal control and risk
management systems, directors and the board help to monitor
business execution and decision-making. At the same time, thethat is focused on quick and bold decision-making. In this manner,

Reasons for appointment

Tomofumi
Akiyama

Mr. Akiyama has extensive experience in corporate management through his previous role as President of Fukoku MutualLife Insurance Company. Drawing on his extensive management experience and judgment, Mr. Akiyama provides
oversight of management activities at the Nisshinbo Group.

NoboruMatsudaMr. Matsuda has experience as a public prosecutor andlawyer and has specialist legal knowledge. Drawing on hishighly specialist expertise, long track record and judgment,
Mr. Matsuda provides oversight of management activities at
the Nisshinbo Group.

the Company aims to achieve greater accountability to stakeholders,increased profitability, and higher returns for shareholders.
In light of the above, the Board of Directors deliberates anddecides on important management matters at board meetings,
such as the formulation of management strategies and plans,
Yoshinori
Shimizu

implementation of M&As. These management matters are
determined based on the criteria for agenda items stipulated
under the Companies Act of Japan, other statutory and regulatory
requirements, and various internal rules that govern the Board of

Shinobu
FujinoDirectors and the delegation of authority. Further, in its deliberations and decisions, the board keeps the following matters in mind.

Mr. Shimizu has specialist knowledge, mainly in the fields offinance and monetary affairs, in his role as a university
professor. Drawing on his highly specialist expertise, longtrack record and judgment, Mr. Shimizu provides oversight ofmanagement activities at the Nisshinbo Group.

Introduced outside director system andmanaging officer system, reduced termof office for directors from two years
to one

2006

2015

‌

Reduced number of board members from13 to 10 (including four outside directors)

2016
‌

Established Remuneration Committee
and Nomination Committee (both discretionary bodies), started evaluating
effectiveness of Board of Directors• Alignment with corporate philosophy and management policy• Compliance with laws and regulations and corporate ethics• Increasing medium- to long-term corporate value

Dialogue with Shareholders• Securing the trust of various stakeholders including share-

The IR Director, who oversees policies and measures related toholders, customers, employees, business partners, andcommunication with shareholders and investors, accurately andlocal communities

fairly disseminates information outside the Company and proac-

To promote the globalization of each Nisshinbo company along

enhance the General Shareholders’ Meeting, where senior

the lines of environment and energy, the Board of Directors selects

management can interact directly with shareholders, and thepersonnel who possess extensive management and professional

results briefings and briefings to overseas investors. In addition,

experience and high-level expertise and who can enrich and ensure

the Company plans and conducts individual meetings withthe diversity of the board. The current Board of Directors isdomestic and overseas investors throughout the year.
If deemed necessary, the IR Director and other directors

directors (including one woman). The maximum number ofand managing officers take part in responding to applications

directors is set at 14 in the Company’s Articles of Incorporation.

for interviews from shareholders and investors.

With respect to independent outside directors, the Board of

The status of IR activities including measures and policies

Directors shall obtain the consent of the person in question andabout communication with shareholders and investors is routinely

appoint them after carefully determining their eligibility as anreported to the Board of Directors where it is reviewed.

independent director, taking into consideration the externalrequirements set forth in the Companies Act and the independence

able to properly fulfill their roles and responsibilities, when

As part of efforts to improve the effectiveness of the Board of

nominating a candidate, the Company shall understand the status

Directors, the Company is taking a number of steps to ensureof officers who concurrently serve in other listed companies or

outside directors participate appropriately in board meetingcompanies and organizations that correspond to such, and verify

discussions by putting forward their opinions.

64‌Introduced restricted stockcompensation system

05Number of inside directors

10
Number of outside directors (15 (people)of which are women)

Survey of Directors and Audit & Supervisory Board Members
In April each year, the Company surveys all directors and all
audit & supervisory board members about the effectivenessof the Board of Directors. Responses to this year’s survey
were again collated and reported to the board. The survey
was used to assess the effectiveness of the Board of
Directors and to discuss improvements by helping the board
understand the current situation, identify and analyze any
issues and compare responses with those in the previous
year’s survey. The following areas were assessed:

The results of the survey indicate that the 10 directors,
including four outside directors with diverse backgrounds,
have dynamic discussions during board meetings, and thatthe board is appropriately fulfilling its decision-making function
for key management matters and its oversight function forbusiness execution. To further improve the effectiveness of
the Board of Directors, Nisshinbo has revised its criteria forraising and validating matters discussed by the board andworked to create clear documents and explanations for board
members. In board meetings, the weighting for matters related
to management strategy and medium- to long-term businessobjectives has been raised further in order to stimulate anddeepen discussion by the board.

1. Operation of the Board of Directors
2. Discussions by the Board of Directors
3. Composition of the Board of Directors
4. Provision of information and training opportunities
to the Board of Directors

65

Financials

directors and outside Audit & Supervisory Board members are

Measures to Improve the Effectiveness of
the Board of Directors

standards set by securities exchanges. To ensure that outside

2018

Management Framework

composed of 10 directors, of which four are independent outside

Abolished internal advisor andconsultant system

2017(year)

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Business Segments

tively conducts IR activities. The IR Director also strives toIncreased number of outside directors
from three to four

Composition of the Board of Directors

Special Feature

Ms. Fujino has specialist knowledge and experience, mainly inthe field of personnel development, in her role as a career
counselor. Drawing on her extensive expertise and experienceand her perspective as a woman, Ms. Fujino provides
oversight of management activities at the Nisshinbo Groupand contributes to the promotion of diversity management.

Corporate Governance Reforms

Strategychanges to the business portfolio group structure, and theWhen necessary, board members are also given the oppor-

ProfileCompany fearlessly confronts risk and works to achieve governanceName

At the start of board meetings, the chairperson provides

Risk Management
Initiatives to Protect Personal Information

customers and other sensitive information.

In order to fulfill its corporate social responsibility by contributing to society through ongoing busi-

The Nisshinbo Group recognizes that one of its key corporate

ness activities, the Nisshinbo Group has established systems to ensure stable operations by mitigat-

social responsibilities is to ensure important information related

ing system to prevent targeted mail system attacks and installs

to all its stakeholders is protected and managed appropriately.

security update programs to ensure its IT devices and systems

In order to fulfill this responsibility, the Company handles person-

are fully protected against attack from computer viruses. We also

al information in accordance with its internal privacy policy. In

use an information security management system to monitor

addition, internal audits are conducted in line with Company regu-

access to critical data and prevent unauthorized IT devices frommanagement team decides whether to activate the Group’s

lations to ensure systems are working properly, and steps areaccessing our network. Using these tools, we are working tobusiness continuity plan (BCP).

taken to prevent data leaks and realize ongoing improvements.

prevent and control internal data leaks and block external attacks

ing a range of risks that could have a serious impact on the smooth operation of its business.

To prepare for that kind of scenario, we started running

In addition, to raise awareness about the importance ofcompact water pumps, chemical protection suits, life-saving

business continuity management (BCM) drills in the fiscal year

protecting personal information among all our employees, we

equipment, chemical fire trucks and other equipment suited to

ended March 2016. In the fiscal year ended March 2018, we held

provide training when employees join the Group or on promotion,

guidelines. To ensure continuous improvement in information

the facilities and location of each site. As part of efforts toour third BCM drill, which ran from August 31 to September 1,

and run training programs at individual business sites in line withsecurity, we conduct regular internal IT audits of domestic

improve emergency response capabilities, business sites also

2017. The key elements of the drill were as follows:

annual plans. Also, with the start of Japan’s new national identity

subsidiaries to confirm the guidelines are being followed. We aresystem in January 2016, we formulated new regulations govern-

working to raise awareness of information security among users

Firefighting teams at each Group business site have access to

conduct regular rapid response drills to increase readiness foron our systems.
Group companies are required to follow information security

Safety confirmation and emergency contact system drill:

ing the handling of personally identifiable information and re-of IT systems across the Group through regular training programs

gencies such as gas or chemical leaks.

All of the approximately 12,000 domestic employees in the

sponded to changes in the EU’s system for protecting personnel

using learning materials that clearly set out rules to be followed.

Nisshinbo Group, including those at domestic affiliates,

information, which came into effect in May 2018.

which are reviewed by managing officers, to ensure disaster preven-practiced uploading their information to the system.

tion management activities remain at a high state of readiness.

Emergency reporting drill: The 12 emergency contacts atfrom an internal location to an external data center to ensurebusiness continuity in the event of a major natural disaster.

each Group company reported the situation at their sites to

Initiatives to Ensure Information Security

the Group Crisis Response Team. The method of reporting

The Nisshinbo Group is constantly reinforcing information securi-

emergencies (emails sent to a designated address) was

ty measures to prevent leaks of personal information about

As explained above, the Nisshinbo Group has conducted disaster

carefully rechecked.

drills as part of disaster readiness inspections for some time,Group Crisis Response Team drill: A Nisshinbo Holdings Emer-

helping to adjust and improve disaster and fire prevention plans.

gency Headquarters led by the president, was set up at Nisshinbo’s

In the past, disaster drills focused on first-response training athead office building and used to conduct practical training drills.

individual business sites, but the Group now recognizes that aCompliance
Based on two principles in its Corporate Philosophy – Public Entity and Consistent Integrity – theNisshinbo Group’s mission is to act with fairness and integrity in order to contribute to society

The drill was completed one hour earlier than planned due tosegments, head office divisions and Nisshinbo Holdings is an

an improvement in the abilities of participants compared with thethrough its business activities. We have formulated the Nisshinbo Group Business Conduct Guide-

essential part of responding to a major earthquake or otherprevious fiscal year. We will continue to increase the Group’slines in order to win trust from the public through fair and honest business activities.

disaster that causes widespread damage. After the initial re-

proficiency through regular training drills, as rapid and accuratesponse phase, when human and physical damage is ascertained

information gathering and calm judgment will be needed In thefollowing the disaster (usually completed within 72 hours), theevent of an actual emergency.

Tatebayashi
Kawagoe

Ningyo-cho (Head office)Yokoyama-cho, Nakano
OsakaHigashihiroshima

Miai
Hamakita

Earthquake (Magnitude 8.0)

66

Toke
7
6 Upper
6 Lower
5 Upper
5 Lower43

can submit reports to the system. Group employees can use thehandle all compliance matters across the Group. The committee

system to communicate directly with the Corporate Ethics Com-answers directly to the president and is led by a director with amittee or an outside corporate attorney. Every effort is made todual role as a managing officer.

protect those who have used the system from unfair treatment.

The Corporate Ethics Committee is responsible forIf the Corporate Ethics Committee receives a report via the(1) implementing corporate ethics systems and regulations,system, it launches an investigation and takes appropriate action(2) deciding the content and methods of corporate ethics training

where necessary. If the outside corporate attorney receives afor employees, and (3) formulating and implementing investiga-

report, appropriate action is taken based on close cooperation

tions, responses, procedures and remedial measures related towith the Corporate Ethics Committee. Serious matters are

consultations and reports received through the Company’s

promptly reported to the president. In the case of reports re-

Corporate Ethics Reporting System.

ceived from individuals who have provided their name andcontact details, the Corporate Ethics Committee provides information to them, such as updates on the investigation and a

Corporate Ethics Reporting Systemsummary of its conclusions. Regular reports are also submitted

The Nisshinbo Group has established a Corporate Ethics Reportingto the Board of Directors and the Audit & Supervisory Board to

System to rapidly identify and prevent any reoccurrence of poten-

ensure any information and concerns reported to the committee

67

Financials

Tokushima,
Yoshinogawa

FujiedaAsahi

tial or actual legal violations. Group employees and external parties

Nisshinbo has established a Corporate Ethics Committee toManagement Framework

Nagano,Ueda

Corporate Ethics Committee

Business Segments

coordinated and joint response by damaged facilities, business

Assumptions Used in BCM Drills for Fiscal Year
Ended March 2018

Special Feature

Initiatives to Ensure Business Continuity

In addition, we are migrating the Company’s business servers

Strategy

early-stage fires, life-saving situations and other potential emerMajor business sites also conduct comprehensive disaster drills,

ProfileCrisis Management System and Disaster Rapid
Response System

Nisshinbo widely uses anti-virus software, an email monitor-

are dealt with in an objective manner. In addition, the Corporateetc.), the guidebook provides information about international

Ethics Committee works to prevent any future violations of laws

treaties and laws designed to prevent corruption, such as theor corporate ethics by providing information to all companies inUnited Nations Convention Against Corruption (UNCAC), OECD

the Group about its response to the issue based on the results oftreaties on preventing corruption of overseas public officials in

the investigation.

international transactions, the US Foreign Corrupt Practices Act(FCPA) and its related guidelines, and the UK Bribery Act. An updat-

Corporate Ethics Reporting System

ed guidebook containing the latest information was distributed to

Board of Directors

Nisshinbo
Holdings Inc.

Ensuring Business Confidentiality

ReportPresident(Corporate Attorney)

PromoteGroupwide
understanding

the product design and development stage.
We also conduct annual internal audits to check whether the

The Nisshinbo Group’s Financial Strategy

72

Eleven-Year Summary

Stakeholders

CSR Procurement Basic Policy

74

Management’s Discussion and Analysis

As part of its corporate social responsibility (CSR) initiatives, the80

Consolidated Balance Sheets

82

Consolidated Statements of Income

83

Consolidated Statements of Comprehensive Income (Loss)

Nisshinbo Group has set out its policy on procurement in the

Compliance Education

Nisshinbo Group Business Conduct Guidelines. The Group has
also formulated the Nisshinbo Group CSR Procurement Basicshinbo Group conducts compliance training for different employ-

Policy, clarifying its stance on seven specific areas: legal compli-

ee levels and work sites and provides training to employees priorance, fair trade, information security, environmental protection,

84

Consolidated Statements of Changes in Equity

to overseas assignments.

human rights, health and safety, and quality assurance.

85

Consolidated Statements of Cash Flows86

Segment Information

From the fiscal year ended March 2017, we added annualcompliance training for all manager-grade employees in theBusiness Segments

In order to ensure fair and honest business practices, the Nis-

1. To strictly observe all legal obligations and social norms

Group to our list of KPIs in order to raise awareness about

2. To always pursue business in a sound and fair mannercompliance. We also created a compliance training manual for3. To properly manage all information

managers in both Japanese and English to be used in training

4. To give due consideration to protection of the environment

sessions across the Group.

5. To respect all basic human rights

In addition, compliance training is provided at each subsidiary

Special Feature

70

Group’s trade secrets are being managed appropriately.

Report, consult(Disclosed / undisclosed whistleblower)

Response(Disclosed whistleblower)

Financials
Strategy

External Contact Point
Coordinate

property, technologies and expertise disclosed to them during

Group companies

Internal Contact Point

prevent any leak of confidential information such as intellectual

Investigate

Corporate Ethics Committee(Corporate Ethics Committee)

Nisshinbo signs non-disclosure agreements with suppliers toDivision subject to investigation

ReportInstructProfileall the Group’s subsidiaries in the fiscal year ended March 2018.

Nisshinbo Group

6. To strive for a secure and healthy living and working environmentin accordance with conditions in each country, region and industry.

Initiatives to Prevent Corruption

We are working to extend our CSR initiatives across the entire

In recent years, countries worldwide have been reinforcing

supply chain by asking suppliers to adhere to our principles inregulatory systems and stepping up efforts to prevent andthose seven areas.

expose bribery and corruption. Nisshinbo is working to prevent

Management Framework

7. To aim to ensure the quality and safety of all products and services

To promote steady improvement in CSR procurement, eachGroup company is now required to formulate their own CSR

Business Conduct Guidelines. In the fiscal year ended March

Procurement Guidelines. In the fiscal year ended March 2018,2016, we published a Corruption Prevention Guidebook withGroup companies also conducted supplier CSR surveys, which are

information about related laws and regulations overseas, as well

now included in the Group’s list of KPIs. Going forward, we will

as in Japan. The guidebook is provided to all Group companies,

work closely with our suppliers to implement CSR procurement.

Financials

any such illegal activity, in line with rules in the Nisshinbo Group

including subsidiaries overseas. In addition to information about
Article 18 of Japan’s Unfair Competition Prevention Act (prohibition of provision of illicit profit, etc., to foreign public officials,

68

69

The Nisshinbo Group’s Financial Strategy

The Nisshinbo Group’s long-term goals are ROE of 12% and sales of ¥1 trillion in the fiscal year

Supporting the Group’s Global Strategy

Meanwhile, we aim to invest the equivalent of roughly 4% ofsales in research and development. We need to maintain that

The Nisshinbo Group is stepping up efforts to create a global

businesses, invest in R&D to create new businesses and advance strategic M&A deals. We arelevel of investment to generate cash flow in the future. Again,

business to drive sustained growth. In the fiscal year ended

investment in research and development will be targeted on

March 2018, the overseas sales ratio reached 47%, and webusinesses in the automotive and super smart society fields,

expect the ratio to rise even higher. That accelerating global

where demand for investment is strong. Examples include

expansion is leading to an increase in the number of subsidiaries

Nisshinbo’s parts and materials for fuel cell vehicles, which attracted

based overseas. Given that trend, we recently appointed Deloitte

considerable attention in the media in autumn 2017, and the

Touche Tohmatsu LLC as an additional auditing firm to help us

establishment of JRC Mobility Inc. (see page 17 for more details).

widen and strengthen auditing procedures.

implementing the following financial strategy to secure funds in support of those efforts.

automotive and super smart society fields as part of its medium-need to tighten inventory management even further. As of

year-end from March 31 to December 31 to increase thewe have separated investment into two categories — growth

March 31, 2018, inventory assets stood at roughly ¥100 billion.

efficiency of Group operations and to enhance management

investment and underlying investment. To achieve our strategy

Even taking into account the characteristics of each business,transparency by improving the timing and quality of corporate

objectives, the operating margin in growth businesses will have

I’m confident we can reduce inventories to support cash flow.

disclosures. We next plan to look at the possibility of adopting

to be higher than in existing businesses. All investment decisions

Specifically, our businesses need to firmly take the initiative andinternational financial reporting standards (IFRS).

will take into account the Group’s cost of capital, which is currently

set targets that will drive change in their operations and cut

around 6%.

inventories. We are also selling real estate assets and securities

growing need to deal with tax matters and cross-border transac-

holdings to procure funds for investment. We have formulated

tions in each market, particularly in emerging economies. We plan

the Nisshinbo Corporate Governance Policy based on Japan's

to reinforce tax governance processes as a management priority.

Corporate Governance Code. In line with our policy, we
remain committed to reducing cross-shareholdings and we

In the fiscal year ended March 2018, operating income and net

regularly assess the purpose and economic rationale for

Shareholder Return Policy

income both exceeded start-of-year forecasts. However, looking

holding those shares.

The Nisshinbo Group is targeting a consolidated dividend payout

back at the previous three years, we fell short of our forecasts in

Measures to Achieve Our Long-term Goals
Our long-term goals for 2025 and our balance sheet and profit

We expect to seek funding from external sources to meetratio of roughly 30% through stable and consistent dividends.

each fiscal year and it was imperative that we improved thestrong demand for funds across the Group. Interest-bearing debt

For the fiscal year ended March 2018, we maintained the annual

earnings capabilities of our businesses to also help us procure

is currently just under ¥150 billion, but we have the capacity to

dividend at ¥30 per share. Going forward, we are committed tofunds on better terms.

lift that to ¥200 billion without putting stress on the business.

paying a base-level dividend of ¥30 per share. When the Group

However, with interest rates now rising in Europe and North

has sufficient internal reserves to fund investment in growth,

the President (see pages 6-11 for more details). To reiterate whatin growth fields to strengthen earnings. In the automobile brakes

America and the economic outlook increasingly hard to read,such as research and development, increases in capital invest-

Mr. Kawata says, we aim to increase capital efficiency andbusiness, we have moved quickly to respond to tighter regulations

we have to be a little more cautious than before.

ment and M&A deals, we will endeavor to return profits toachieve ROE of 12% by prioritizing growth in operating income.

on brake friction materials in North America by developing

shareholders through dividend hikes and share buybacks afterSpecifically, we will streamline the balance sheet to create acopper-free friction materials. Orders for those materials havetaking into account the Group’s financial stability.

leaner company, while also aiming to generate operating income

been strong, so we approved an investment to increase produc-of ¥70-80 billion and lift the operating margin to around 7-8%.

tion capacity. The micro devices business, which has strengthened

Guided by the main principles of the Group’s Corporate

its presence in the market with the acquisition of Ricoh Electronic

Dividends, Share Buybacks and Total Shareholder Return Ratio

Philosophy — Public Entity, Consistent Integrity, and Innovation

Devices Co., Ltd. earlier this year, will also invest heavily to(billions of yen)

— Nisshinbo, as an Environment and Energy Company group, isaddress projected growth in demand for devices used in automo-channeling management resources into businesses related to thetive and industrial machinery applications.

Share Buybacks (left)

Dividends (left)

Total Shareholder Return Ratio (right)

(%)
500

25

400
20

Recent Performance300(millions of yen)

2015

2016

2017

200

15

2018

ActualInitial forecast

ActualInitial forecast

ActualInitial forecast

ActualNet Sales

530,000

523,758

550,000

533,989

570,000

527,274

520,000

512,048

Operating Income

18,00013,74420,00012,617

16,0004,890

15,00015,086

Ordinary Income

22,00020,65025,00017,03421,00010,55620,00019,700Net Income Attributable to Ownersof Nisshinbo Holdings Inc.

10,00013,69416,00010,776

10,000

3,575

20,00026,352100
0

10

Financials

Initial forecast

5

0

07.3

70

Management Framework

As I mentioned earlier, we need to make timely investments

Business Segments

projections for the same year are explained in the Message fromSpecial Feature

Executive Managing Officer
Chief of Business Support Center

Another trend in our increasingly global business is theStrategy

Takayoshi Okugawa

We also decided to change the Group’s consolidated fiscal

To help us generate the cash for those investments, we will

to long-term business strategy. Reflecting that approach,

Procuring and Allocating Funds toInvest in GrowthProfileending December 2025. To achieve those goals, we will use capital investment to grow existing

08.3

09.3

10.3

11.3

Note: Total shareholder return ratio not shown for the fiscal year
ended March 2009 due to losses in that year.

12.3

13.3

71

14.3

15.3

16.3

17.3

18.3

Eleven-Year Summary(For the years ended March 31)(millions of yen)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

¥322,412¥286,167¥242,409¥325,555¥379,340¥450,693¥494,350¥523,758¥533,989¥527,274¥512,048

Electronics

76,47560,54951,699112,820

169,907

175,308

187,743

209,116

205,368

190,852

193,621

Automobile Brakes

59,812

49,23041,046

46,11947,450118,849

148,699

161,887

165,037

146,062

154,205

Precision Instruments

34,02135,602

24,90832,02025,191

24,52028,65528,60829,52560,68764,918Chemicals

9,582

8,059

6,309

7,284

8,258

8,150

8,810

8,138

8,285

9,483

11,285

Textiles

76,09464,39253,222

57,40060,96454,73654,63051,07360,12755,84254,640Papers33,54734,214

31,53630,32630,22030,524

31,686

31,28032,58532,648—Operating Results
Net Sales

6,298

12,437

9,082

15,367

10,567

9,246

8,358

8,084

8,406

28,11027,391

27,14928,26823,23923,56024,41024,704

23,61624,973Operating Income

12,034408

3,570

19,843

4,170

13,394

13,175

13,744

12,617

4,890

15,086Net Income (Loss) Attributable to Owners of
Nisshinbo Holdings Inc.

12,290(1,286)

1,896

11,185

9,416

6,418

9,012

13,694

10,776

3,575

26,352Equity¥245,909¥193,698¥193,639¥211,557¥213,751¥242,623¥276,865¥306,938¥284,472¥275,753¥290,434

Total Assets

424,706

366,858

358,110479,852

534,584

551,933

611,311

678,486

651,793646,288654,227

Capital Expenditures

24,28016,872

13,027

12,80015,705

20,12319,89636,90922,86230,50530,103

Depreciation and Amortization

16,89018,025

12,96013,15814,55018,96921,48623,111

22,571

22,264

22,183

Net Cash Provided by Operating Activities¥24,779¥11,939¥27,538¥16,529¥12,974¥34,095¥26,075¥37,120¥39,566¥26,768¥32,415

Net Cash Provided by (Used in) Investing Activities(19,147)(14,393)(9,949)11,591(57,861)(10,973)(19,862)(21,271)(22,793)(31,429)(1,798)Net Cash Provided by (Used in) Financing Activities(8,829)11,940(30,347)703

16,835(24,073)(2,321)(6,238)(9,044)

3,595(34,785)

Financial Position

Cash Flows

Special Feature

6,011

27,871Strategy

5,010

Other Businesses

ProfileReal Estate(yen)

Net Income (Loss) Attributable to Owners of
Nisshinbo Holdings Inc.
Shareholders’ Equity¥63.34¥(7.08)¥10.38¥63.32¥53.83¥36.74¥51.60¥80.33¥67.93¥22.52¥160.59

1,179.43

985.191,034.04

1,036.80

1,063.19

1,198.67

1,369.78

1,634.07

1,472.26

1,444.94

1,659.29

15.00

15.00

15.00

15.00

15.00

15.00

15.00

15.00

30.00

30.00

30.00

Cash Dividends

Business Segments

Per Share

(%)

53.0

49.0

51.1

38.0

34.7

37.9

39.1

38.2

35.9

35.5

41.1

Return on Assets (ROA)

2.7

(0.3)

0.5

2.7

1.9

1.2

1.5

2.1

1.6

0.6

4.0

Return on Equity (ROE)

5.1

(0.6)

1.0

6.1

5.1

3.2

4.0

5.5

4.4

1.5

10.6

Payout Ratio

23.6

—

144.5

23.7

27.9

40.8

29.1

18.7

44.2

133.2

18.7

13,253

12,726

12,48818,292

22,30422,08322,052

21,387

23,05523,256

23,104

Number of Patents Approved

—

—

—

1,986

1,986

2,293

2,448

2,424

2,441

2,402

2,399

Greenhouse Gas Emissions per Unit of Sales(t-CO2/million yen)

—

—

—

—

—

—

1.372

1.330

1.267

1.311

1.279

ESG Indicators
Number of Employees

Notes: 1. In the fiscal year ended March 2017, Iwao & Co., Ltd. was merged with Nisshin Toa Inc., both of which are consolidated subsidiaries. The appareltextile operations of Iwao & Co., Ltd. included in the other businesses segment were reclassified under the textiles business segment as a result.
Figures from the fiscal year ended March 2013 have been adjusted to reflect this change.
2. The Group’s elastomer operations were transferred from the chemicals business to the textiles business in the fiscal year ended March 2016.
Figures from the fiscal year ended March 2015 have been adjusted to reflect this change.

72

73

Financials

Shareholders’ Equity Ratio

Management Framework

Key Ratios

Management’s Discussion and Analysis

Highlights• All businesses performed well, but net sales declined due to the sale of the papers businessat the start of the fiscal year.
• Operating income increased sharply, reflecting a large improvement in profitability at Japan Radio Co., Ltd.
and the end of the amortization schedule for TMD goodwill.

Operating Results

Operating Income(billions of yen)(billions of yen)

600

Segment Results
Net Sales (millions of yen)

20

500

15

400
300

10
5

100
0

0
13.3

14.3

15.3

16.3

17.3

18.3

13.3

74

14.3

15.3

16.3

17.3

18.3

193,621 up 1.5%

3,022 improvement of ¥6,262 million

Automobile Brakes

154,205 up 5.6%

6,119 improvement of ¥6,126 million

Precision Instruments

64,918 up 7.0%

1,725 up 64.4%

Chemicals

11,285 up 19.0%

2,112 up 61.3%

Textiles

54,640 down 2.2%

1,876 up 5.5%

Real Estate

8,406 up 4.0%

5,067 down 12.8%

Other Businesses

24,973 up 5.7%

46 improvement of ¥137 million

Note: Changes in net sales and segment profit (loss) are year-on-year figures; please refer to pages 40 to 54 for details on performance in individual segments.

75

Financials

200

Segment Profit (millions of yen)

Electronics

Management Framework

Net Sales

Business Segments

One of the key principles of the Nisshinbo Group Corporate
Philosophy is Public Entity, which expresses our desire tocontribute to society through our business activities, while
also developing the Company to benefit stakeholders. We
will step up efforts to realize that philosophy by increasing
our focus on environmental, social and corporate governance issues, and by providing solutions that address someof the biggest issues faced by society today, such as environmental destruction and global warming, to make life
safer and more secure for people everywhere.
Guided by that philosophy and approach, the Groupis focusing on four strategic business areas: wirelessSpecial Feature

Medium-term Management Strategy

The Company is changing its fiscal year-end from March 31
to December 31, effective from the fiscal period ending
December 31, 2018. The transitional fiscal period ending
December 2018 will include nine months of results (April
1, 2018 to December 31, 2018) for the Company and subsidiaries with March fiscal year-ends, 10 months of results(March 1, 2018 to December 31, 2018) for subsidiaries
with February fiscal year-ends, and 12 months of results(January 1, 2018 to December 31, 2018) for subsidiaries
with December fiscal year-ends, which will coincide with
the new consolidated fiscal year.
Japan Radio, which is part of the electronics business,
tends to book a large proportion of sales and profits inJanuary, February and March, because it supplies equipment
to central government and local government agencies. As
a result, April through December accounts for a relatively
low weighting of net sales and profits in the Nisshinbo
Group’s consolidated results.
The Nisshinbo Group currently uses Japanese accounting
standards. However, given that the Company’s basic
management policy is to develop its business globally,
overseas operations are likely to account for a growing
share of consolidated earnings. From that perspective,
we are considering voluntarily adopting International Financial Reporting Standards (IFRS), a common set of global
accounting standards. However, no final decision has been
made on timing and other factors related to voluntary
adoption of IFRS at this stage.

StrategyElectronic Devices has been reflected in the Company’s
consolidated balance sheets, as of March 31, 2018. We
started reflecting earnings (income statement) and goodwill amortization in the consolidated statements of income
from the fiscal period ending December 31, 2018.
Average exchange rates for the fiscal year ended
March 31, 2018 were ¥112.04/US$ and ¥127.22/€. For the
fiscal period ending December 31, 2018, we assume average exchange rates of ¥110/US$ and ¥130/€.

The Nisshinbo Group reported net sales of ¥512,048 million(US$4,877 million), down 2.9% year on year. Sales increasedin the electronics, automobile brakes, precision instruments
and chemicals businesses, but net sales declined, mainly
due to the sale of the papers business.
Operating income increased 208.5% year on year to¥15,086 million (US$144 million), largely reflecting a moveinto profit at Japan Radio in the electronics business andhigher profits in the automobile brakes business due to thecompletion of the amortization schedule at the end of the previous fiscal year for goodwill related to the TMD acquisition.
Net income attributable to owners of Nisshinbo Holdings
Inc. rose 637.2% to ¥26,352 million (US$251 million). The
large increase mainly reflected the booking of gain on sales ofshares of subsidiaries and gain on sales of property, plant andequipment due to the transfer of the papers business.
In March 2018, the Company acquired 80% of outstanding shares in Ricoh Electronic Devices Co., Ltd., making
it a consolidated subsidiary. The company, which is focusedon analog power management integrated circuits (PMICs),
will help the Nisshinbo Group accelerate the expansion ofits semiconductor and electronic devices businesses, particularly in the promising automotive and IoT fields. At thispoint, only the financial position (balance sheet) of Ricoh

Change in Fiscal Year-end andSelection of Accounting Standards

Profile• The next fiscal period will be a transitional period ending on December 31, 2018, due to a change
in fiscal year-end.

and chemicals and actively seek M&A targets and business
partners to diversify our business, aiming to deliver results
as an Environmental and Energy Company group. Basedon the above approach, the Nisshinbo Group will work towards its long-term goals of net sales of ¥1 trillion and ROEof 12% in the fiscal year ending December 2025.

communications and electronics, automotive parts anddevices, lifestyle and materials, and new energy and smart
society. Specifically, we are pursuing tireless innovation toreinforce existing businesses, leveraging the results of
R&D projects and actively seeking M&A opportunities.
Going forward, we will implement our growth strategy
by first channeling management resources into businesses
in the automotive field and the super smart society field.
In the automobile brakes field, we have started productionof friction materials that are compatible with new regulations on copper content, demand for which is projected to
expand worldwide. In the US, new regulations are scheduled to come into effect from 2021 that will limit the use of
copper in brake friction materials to prevent water pollution. The Nisshinbo Group has moved quickly to develop
friction materials with less or no copper and is one of thefirst in the industry to start mass production of materials
that are compatible with the new regulations. We plan tosteadily expand our lineup of those materials, aiming togrow our business by helping to protect the environment.
In the chemicals field, we are working towards thecommercialization of parts for fuel cell vehicles (carbon
bipolar plates and catalysts to replace platinum) by accelerating development through our strengthened alliance with
Canadian company Ballard Power Systems Inc., a global
pioneer in fuel cells.
In the electronics field, we are preparing to move into
advanced driving assistance systems (ADAS) by leveraging
the Group’s strengths in wireless communication technology and electronic component manufacturing technology.
We will continue to focus on existing public infrastructurebusinesses such as disaster prevention systems and wireless communication systems for marine applications, butwith Industry 4.0, the Internet of Things (IoT) and artificial
intelligence (AI) gaining momentum, we plan to bring together our sensing and communication technologies tohelp create super smart societies. We will draw on our
technologies and expertise in electronics, mechatronics

Dividend

Cash Flows
Also, when the Group holds sufficient internal reserves
to fund growth strategies, we plan to actively return profits
to shareholders through share buybacks and other means
after considering factors such as financial stability.

Cash Dividends
(yen)

30

20

of ¥8,110 million from proceeds from sales of property,
plant and equipment, ¥6,009 million from proceeds fromsales of investment securities and investments in and advances to nonconsolidated subsidiaries and affiliates, and¥21,136 million from proceeds from sales of investments
in subsidiaries with changes in consolidation scope.

Cash Flows from Operating Activities

Cash provided by operating activities totaled ¥32,415 million(US$309 million), mainly reflecting cash provided of ¥33,487
million from income before income taxes and ¥22,183 million from depreciation and amortization, against cash usedof ¥14,396 million for gain on sales of investment securities
and investments in and advances to unconsolidated subsidiaries and affiliates, ¥5,092 million for gain on sales of property, plant and equipment and ¥4,375 million for equity inearnings of an unconsolidated subsidiary and affiliates.

Cash Flows from Financing Activities

Cash Flows from Investing Activities
10

0
13.3

14.3

15.3

16.3

17.3

18.3

Cash used in investing activities totaled ¥1,798 million(US$17 million), primarily reflecting cash used of ¥29,567
million for purchase of property, plant and equipment and¥6,914 million for purchase of investments in subsidiaries
with changes in consolidation scope, against cash provided

Strategy

Cash used in financing activities totaled ¥34,785 million(US$331 million), mainly reflecting cash used of ¥8,327
million for the repayment of long-term debt, ¥4,764 million
for cash dividends paid, and ¥20,011 million for purchaseof treasury stock.
As a result of the above, cash and cash equivalents at
the end of the fiscal year totaled ¥36,478 million, a declineof ¥3,372 million from the end of the previous fiscal year.

ProfileThe full-year dividend for the fiscal year ended March 2018is ¥30 (US$0.29) per share, the same amount as for theprevious fiscal year.
By focusing on ROE, Nisshinbo is aiming to deliver
sustained increases in shareholder value through the
distribution of profits and other means. We also intend
to accelerate investment in areas that drive growth,such as R&D, capital expenditures and M&A, aiming tosecure even greater support and trust from the public,
markets and stakeholders as an Environmental and Energy
Company group.
In principle, we intend to pay an interim dividend anda year-end dividend, targeting stable and consistent dividends based on a consolidated payout ratio target ofaround 30%.

Production Results
Financial Position

Production results in each segment for the fiscal year under review were as follows:

350

600

300

500

250

400

200

300

150

200

100

100

50

0

0
13.3

14.3

15.3

16.3

17.3

18.3

13.3

14.3

15.3

16.3

17.3

18.3

+2.4

Automobile Brakes

123,367+7.4

Precision Instruments

58,148+5.1

Chemicals

7,178

+9.5

Textiles

34,500

-1.6

611

+12.7

418,803-2.2

Other Businesses
Total

Notes: 1. Amounts are calculated based on manufacturing costs.
2. The real estate business does not engage in manufacturing, and therefore the above table does not include any amounts from this segment.

Capital Expenditures
Nisshinbo Brake Inc. invested ¥3,390 million, mainly in
manufacturing and research and development facilities for
products that are compatible with new regulations on copper content.

The Nisshinbo Group channels its capital expenditures into
priority product fields that offer the potential for long-term
growth and into upgrading manufacturing equipment toraise product quality. It also invests in environmental initiatives such as the reduction of greenhouse gases and in
manufacturing facilities to address rising demand in China,
Southeast Asia and other emerging markets. As a result,in the fiscal year ended March 2018, capital expenditures
totaled ¥30,103 million (US$287 million). In the electronics
business, Japan Radio invested ¥1,851 million, mainly inthe marine systems business, and New Japan Radio invested¥4,329 million, primarily in electronic device manufacturing
and research and development facilities. In the automobile
brakes business, TMD invested ¥8,754 million, mainly to
expand friction material manufacturing facilities at TMD
Friction Esco Gmbh, a TMD consolidated subsidiary, andCapital Expenditures(billions of yen)

40
30

Financials(billions of yen)

700

Year-on-Year Change (%)

194,999

20
10
0
13.3

76

Management Framework

Equity(billions of yen)Amount (millions of yen)

Electronics

Business Segments

Total Assets

Industry Segment

Special Feature

short-term bank loans, ¥3,033 million for other current liabilities, ¥5,471 million for long-term debt, ¥1,227 million for
liabilities for retirement benefits and ¥3,415 million for deferred tax liabilities.
Equity at the end of the fiscal year totaled ¥290,434
million (US$2,766 million), an increase of ¥14,681 million
from the end of the previous fiscal year. That primarily reflected increases of ¥9,132 million for capital surplus,¥21,588 million for retained earnings, ¥5,654 million for net
unrealized gain on available-for-sale securities and ¥2,646
million for foreign currency translation adjustments, anda decrease of ¥24,644 million for noncontrolling interests.
As a result of the above, the shareholders’ equity ratio
increased 5.6 percentage points to 41.1%.

Total assets at the end of the fiscal year stood at ¥654,227
million (US$6,231 million), an increase of ¥7,939 million
from the end of the previous fiscal year. That mainly reflected
increases of ¥5,599 million for inventories, ¥5,348 million
for investment securities and ¥4,145 million for investments in and advances to unconsolidated subsidiaries andaffiliates, and decreases of ¥3,372 million for cash andcash equivalents and ¥4,236 million for deferred tax assets.
Total liabilities at the end of the fiscal year were¥363,793 (US$3,465 million), a decline of ¥6,742 million
from the end of the previous fiscal year. The main changes
in liabilities were increases of ¥5,108 million for payables,¥1,225 million for accrued expenses and ¥2,747 million for
accrued income taxes, and decreases of ¥2,665 million for

77

14.3

15.3

16.3

17.3

18.3

Risk Information
Forward-looking statements in this report are based on information available to the Nisshinbo Group as of March 31, 2018.
Risks Associated with New Businesses

Risk of Fluctuation in the Value of Investment Securities

Some of the Nisshinbo Group’s products can be significantly
affected by fluctuations in market prices owing to market
developments and competition with other companies.
Sales prices for textile products and raw materials procuredby the Group such as cotton, steel and other materials are
particularly susceptible to these market trends. The New
Japan Radio Group generates more than 80% of its consolidated sales from semiconductor devices. Significant
fluctuations in demand in the semiconductor market may
therefore have a large impact on the Nisshinbo Group’s
financial results.

Fluctuations in foreign exchange rates can have an impact
on the yen value of the Nisshinbo Group’s revenues,
expenses, receivables and payables arising from business
transactions that are denominated in foreign currencies
and on foreign currency translation adjustments in thefinancial statements related to overseas consolidated
subsidiaries, which prepare their statements in foreign
currencies. While the Group takes steps to mitigate the riskof exchange rate fluctuations, not all this risk can be avoided.
Fluctuations in exchange rates may therefore affect theGroup’s financial results, with periods of yen appreciation
putting pressure on profits.

Risks Associated with Changes

Risks Associated with Unforeseen Revisions

in Customer Business Performanceto Laws and Regulations

The customers of the Nisshinbo Group’s automobile brakes
business are automobile manufacturers that conduct business globally. The cancellation of contracts or requests to
sharply reduce prices owing to changes in the businessresults of such client companies are factors outside thecontrol of Nisshinbo, and consequently may have an impact
on the Group’s financial results.
The Japan Radio Group has a relatively high ratio of
business with central and local governments, so sales
tend to be concentrated in March. In addition, trends incentral and local government spending plans and capital
expenditures in the telecommunications sector may affect
the Group’s financial results.

Products supplied by the Japan Radio Group are subject toa range of laws and regulations governing areas such as
national security. These laws include export restrictions,
import regulations and environmental and recycling laws.
The Japan Radio Group has established clear internal regulations regarding compliance with these laws. However,
unforeseen revisions to laws and regulations may limit theGroup’s business activities and lead to an increase in costs.

The majority of the Nisshinbo Group manufactures products
in accordance with international quality control standards,
but there is no guarantee that quality-related problems will
not occur in the future. The Company has product liability
insurance, but the occurrence of a large liability could havean adverse impact on the Group’s financial results.

Risks Associated with Overseas Business Development

The Nisshinbo Group owns many production bases overseas.
Risks inherent to this international presence include unforeseen changes in laws and regulations, unfavorable politicalor economic factors and social turmoil.

Business Segments

Risks Associated with Product Quality

Special Feature

to Product Sales Prices and Raw Material Procurement

Strategy

Investment securities held by Nisshinbo are marked tomarket in accordance with accounting standards for financial products, and the Company implements impairment
accounting based on even stricter internal standards for a
portion of these securities. Based on current accounting
standards and standards for asset impairment, there is alimited possibility that impairment losses will have an impact
on net income, as the acquisition cost of the investment
securities was low. However, comprehensive income may
fluctuate significantly owing to changes in market value.
Also, the Company plans to limit increases in interest-bearing
liabilities by selling investment securities to procure capitalneeded for mergers and acquisitions, overseas businessdevelopment, and capital investment, but misalignment of
the timing between sale and investment may give rise to
unforeseen circumstances.

Risks Associated with Fluctuations in Exchange Rates

ProfileThe Nisshinbo Group is actively developing new businesses
such as carbon catalysts in order to expand sales and profits.
However, uncertainties are inherent in new businesses
and the development of appealing new products and theformation of new markets may not proceed as anticipated.
This could delay or prevent the recovery of prior investments.

Risks Associated with Market Shifts Relating

Risks Associated with the Supply Chain
Risks Associated with Financial Covenants Related toCapital Procurement

The Nisshinbo Group has secured funding from multiple
financial institutions. The Company and some consolidated
subsidiaries have entered into commitment line contracts
and term loan contracts. These companies are bound bycertain financial covenants.

Management Framework

The Group may face difficulties in securing necessary components owing to changes in the economic environment.
For example, rapid developments in specific parts supply
regions and product fields may affect supply capacity atparts companies and lead to delivery delays. This in turn
could impact the Group’s shipment plans or lead to deterioration in margins owing to sharp increases in the price ofcomponents.

Risks Associated with Disasters and Accidents

78

Financials

The Nisshinbo Group takes steps to manage risk related todisasters and accidents. However, a large earthquake orother major disaster or a sudden accident such as a fire may
cause significant damage to the Group’s manufacturing
facilities, leading to the suspension of production activities
that causes shipment delays. The Group may also incur considerable costs to restore damaged buildings or facilities.
In addition, the outbreak and spread of a new infectious
disease may have an impact on the Group’s operations.

79

Consolidated Balance Sheets
March 31, 2018 and 2017

Millions of Yen

ASSETS

Thousands of
U.S. Dollars (Note)

2018

2017

2018

¥36,478¥39,850$347,410

6,568

7,841

62,552CURRENT ASSETS:

Millions of Yen

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars (Note)

2018

2017

2018

Short-term bank loans¥46,312¥48,977$441,067

Commercial paper

30,00030,000285,714

Current portion of long-term debt

8,245

8,661

78,524

Trade notes

22,187

19,394

211,305

Trade accounts

49,74853,028473,790

CURRENT LIABILITIES:Cash and cash equivalents
Time deposits
Receivables:

Payables:
24,043

7,011

228,981

Trade accounts

127,211141,288

1,211,533

Unconsolidated subsidiaries and affiliates

1,010

1,034

9,619

Unconsolidated subsidiaries and affiliates

Other

4,568

5,388

43,505

Other

Allowance for doubtful receivables

(784)

(579)

(7,467)

Inventories

14

11

133

16,170

10,578154,000

Accrued expenses

18,062

16,837

172,01955,01999,7701,003,514

Accrued income taxes

5,777

3,030

4,878

6,001

46,457

Deferred tax liabilities

106

190

1,009

Other current assets

6,633

7,196

63,172Other current liabilities

12,435

15,468118,429

209,056

206,174

1,991,009

315,974

314,800

3,009,276
Long-term debt

65,00570,476

619,095

Liability for retirement benefits

48,05549,282457,667

Deferred tax liabilities

27,41030,741

261,048

Other long-term liabilities

14,267

13,862

135,876

Total long-term liabilities

154,737

164,361

1,473,686

Total liabilities

363,793

370,535

3,464,695

Total current liabilities
Total current assets

Strategy

105,369

Deferred tax assets

ProfileTrade notes

LONG-TERM LIABILITIES:

Land

37,812

39,215360,114

Buildings and structures

170,516

176,205

1,623,962

Machinery, equipment and tools

349,754

321,119

3,330,990

Construction in progress

12,6499,130

120,467

Net property, plant and equipment

570,731545,669

5,435,533(384,713)(360,184)(3,663,933)

186,018

185,485

1,771,600

EQUITY:
Shareholders’ equity:
Common stock—authorized, 371,755,000 shares; issued,
178,798,939 shares in 2018 and 201727,588262,743

26,71917,587

254,467

Retained earnings

189,186

167,598

1,801,771

20,013,820 shares in 2017(24,610)(23,090)(234,381)

Total shareholders’ equity

218,883

189,683

2,084,600

42,96437,310409,181

(19)

3

(181)

10,361

7,715

98,676

Treasury stock—at cost, 16,818,957 shares in 2018 andAccumulated other comprehensive income:Net unrealized gain on available-for-sale securities
INVESTMENTS AND OTHER ASSETS:

Deferred (loss) gain on derivatives under hedge accounting

Investment securities

85,86280,514

817,733

Foreign currency translation adjustments

Investments in and advances to unconsolidated subsidiaries and affiliates

31,85827,713

303,410

Post-retirement liability adjustments

Deferred tax assets

6,631

9,744

63,152

Goodwill

8,945

8,078

85,191

Other

18,93919,954

180,371

Total
Stock acquisition rights
Noncontrolling interests

TOTAL

152,235

146,0031,449,857¥654,227¥646,288$6,230,733

Total equity
TOTAL

Note: The translations of Japanese yen amounts into U.S. dollar ($) amounts are included solely for the convenience of readers outside Japan and havebeen made at the rate of ¥105 to $1, the approximate rate of exchange at March 31, 2018.

80

81(5,276)(32,552)

39,752475,124

152

163

1,447

268,923

229,598

2,561,171

21,511

46,155

204,867

290,434

275,753

2,766,038¥654,227¥646,288$6,230,733

Financials

Total investments and other assets(3,418)49,888

Management Framework

27,588

Capital surplus

Business Segments

Total
Accumulated depreciation

Special Feature

PROPERTY, PLANT AND EQUIPMENT:

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income (Loss)

Years Ended March 31, 2018 and 2017

Years Ended March 31, 2018 and 2017

Millions of Yen

Thousands of
U.S. Dollars (Note)

Millions of Yen

2018

2017

2018

NET SALES¥512,048¥527,274$4,876,648

NET INCOME

COST OF SALES

406,069

420,610

3,867,324

OTHER COMPREHENSIVE INCOME (LOSS):

2017

2018

¥26,587¥1,833$253,210

5,742

1,281

54,686SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

105,979

106,664

1,009,324

(22)

59

(210)

90,893

101,774

865,648

Foreign currency translation adjustments

2,802(4,559)26,686

Post-retirement liability adjustments

1,905

(51)

18,142

15,086

4,890

143,676

428

(559)

4,076

10,855(3,829)103,380¥37,442¥(1,996)$356,590¥36,489¥493$347,514

953(2,489)

9,076

Deferred (loss) gain on derivatives under hedge accounting

Equity in earnings of an unconsolidated subsidiary and affiliates
Operating income

Total other comprehensive income (loss)

Profile2018

Net unrealized gain on available-for-sale securities
Gross profit

Thousands of
U.S. Dollars (Note)

OTHER INCOME (EXPENSES):COMPREHENSIVE INCOME (LOSS)

2,818

2,730

26,838Interest expense

(862)

(969)

(8,209)Gain on sales of property, plant and equipment

5,473

184

52,124Equity in earnings of an unconsolidated subsidiary and affiliates

4,375

4,406

41,667

Owners of Nisshinbo Holdings Inc.

Loss on impairment of long-lived assets(4,522)(4,093)(43,067)

Noncontrolling interests

Gain on sales of securities

14,3983,066

137,124

Other—net(3,279)(3,497)(31,229)

Other income (expenses)—net

18,401

1,827

175,248

INCOME BEFORE INCOME TAXES

33,487

6,717

318,924

Current

8,053

4,982

76,695

Deferred(1,153)(98)(10,981)

6,900

4,884

65,714

26,587

1,833

253,210235(1,742)

2,239¥26,352¥3,575$250,971

StrategyInterest and dividend income

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:

Special Feature

INCOME TAXES:NET INCOME

NET INCOME ATTRIBUTABLE TO OWNERS OF
NISSHINBO HOLDINGS INC.

Yen

Management Framework

NET INCOME (LOSS) ATTRIBUTABLE TONONCONTROLLING INTERESTSBusiness Segments

Total income taxes

U.S. Dollars

Net income
Cash dividends

82¥160.59¥22.52

$1.53

30.00

30.00

0.29

Financials

PER SHARE OF COMMON STOCK:

83

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Years Ended March 31, 2018 and 2017

Years Ended March 31, 2018 and 2017
Millions of Yen
Millions of Yen

Accumulated Other Comprehensive Income

BALANCE, APRIL 1, 2016

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock

Total
Shareholders’EquityNet Unrealized
Gain onAvailable-for-Sale
Securities

Deferred (Loss)
Gain onDerivatives
under Hedge
Accounting

Foreign
Currency
Translation
Adjustments

PostRetirement
Liability
Adjustments

Stock
Acquisition
Rights

Noncontrolling
Interests

Total
Equity¥27,588¥17,599¥168,825¥(23,156)¥190,856¥36,219¥(56)¥11,887¥(5,216)¥169¥50,613¥284,472(4,762)(4,762)(4,762)

Net income attributableto owners of Nisshinbo
Holdings Inc.

3,575

3,575

3,575

(6)

(6)

Change in scope of
consolidation—transactions with
noncontrolling interests(6)

Purchase of treasury stock
Disposal of treasury stock

(6)

(2)

(2)

(2)

68

62

62
(39)

Adjustment due to increasein consolidated subsidiaries

(39)

(39)

Other

(1)

(1)

Net change in the year
¥27,588¥17,587¥167,598¥(23,090)¥189,683

59(4,172)(60)(6)(4,458)(7,546)¥37,310¥3¥7,715¥(5,276)¥163¥46,155¥275,753

Cash dividends, ¥30.00 per share(4,764)(4,764)(4,764)

Net income attributableto owners of Nisshinbo
Holdings Inc.

26,352

26,352

26,352

Change in scope of
consolidation—transactions with
noncontrolling interests

0

Purchase of treasury stock(20,011)0

0(20,011)(20,011)

(18)

194

176

176

Changes by share exchanges

9,150

18,29727,44727,447

Net change in the year
BALANCE, MARCH 31, 2018¥27,588¥26,719¥189,186¥(24,610)¥218,883

5,654

(22)

2,646

1,858

(11)

(24,644)(14,519)¥42,964¥(19)¥10,361¥(3,418)¥152¥21,511¥290,434

Thousands of U.S. Dollars (Note)
Accumulated Other Comprehensive Income
Deferred (Loss)
Gain onDerivatives
under Hedge
Accounting

Foreign
Currency
Translation
Adjustments

PostRetirement
Liability
Adjustments

Stock
Acquisition
Rights

Noncontrolling
Interests$262,743 $167,495 $1,596,171 $(219,904) $1,806,505$355,333$29$73,476$(50,247)$1,552$439,571 $2,626,219

CommonStock

BALANCE, MARCH 31, 2017

CapitalSurplusRetained
Earnings

Treasury
Stock

Total
Equity(45,371)(45,371)(45,371)

Net income attributableto owners of Nisshinbo
Holdings Inc.

250,971

250,971

250,97100Change in scope of
consolidation—transactions with
noncontrolling interests

0

Purchase of treasury stock(190,581)(190,581)(190,581)

Disposal of treasury stock

(171)

1,847

1,676

1,676

Changes by share exchanges

87,143

174,257

261,400

Net change in the year
BALANCE, MARCH 31, 2018

$262,743 $254,467 $1,801,771 $(234,381) $2,084,600

261,400
53,848(210)

25,20017,695(105)$409,181$(181)$98,676$(32,552)$1,447(234,704)(138,276)$204,867 $2,766,038

FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayment of long-term debt
Decrease in short-term bank loans—net
Cash dividends paid
Purchase of treasury stock
Decrease in other long-term liabilities
Purchase of additional shares of consolidated subsidiaries
Other—net
Net cash (used in) provided by financing activities

84

85$318,924(3,196)22,183
1,688(4,375)76—(202)(5,092)
4,522(9,630)22,2648,264(4,406)
(133)
2,046
2,022
662
4,093

(30,438)
211,267
16,076(41,667)724—(1,924)(48,495)
43,067(14,396)(2,358)(137,105)

120

76

1,143

(2,651)(2,353)
3,692(1,088)(1,072)32,415(6,997)
1,235(1,259)4,172
20,051
26,768(25,248)(22,410)35,162(10,362)(10,210)
308,714

8,110

955

77,238

6,009(29,567)

4,568(29,219)

57,228(281,590)

(414)
1,929
(6,914)(135)(4,372)—(3,943)
18,371(65,847)

21,136—(2,087)(1,798)—(3,443)
217(31,429)

201,295—(19,876)(17,124)

1,975(8,327)(2,647)(4,764)(20,011)
(693)
—
(318)
(34,785)

30,415(14,809)(5,978)(4,762)
(2)
(605)
(80)
(584)
3,595

18,810(79,305)(25,209)(45,371)(190,581)(6,600)—(3,029)(331,285)

796(3,372)(1,388)(2,454)

7,581(32,114)—39,850¥36,478

32
42,272¥39,850—
379,524$347,410

Financials

EFFECT OF EXCHANGE RATE CHANGES ON CASH
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

¥6,717

Management Framework

Cash dividends, $0.29 per share¥33,487

Business Segments

Total
Shareholders’EquityNet Unrealized
Gain onAvailable-for-Sale
Securities

INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment
Proceeds from sales of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Purchase of property, plant and equipment
Purchase of investment securities and investments in and advances tounconsolidated subsidiaries and affiliates
Decrease (increase) in time deposits—net
Purchase of investments in subsidiaries with changes in consolidation scope
Proceeds from sales of investments in subsidiaries with changes in
consolidation scope
Purchase of investments in subsidiaries
Other—net
Net cash used in investing activities

2018

Special Feature

Disposal of treasury stock2017

Strategy

BALANCE, MARCH 31, 2017

(1)
1,091

2018

ProfileCash dividends, ¥30.00 per share

OPERATING ACTIVITIES:
Income before income taxes
Adjustments to reconcile net income to net cash provided
by operating activities:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Equity in earnings of an unconsolidated subsidiary and affiliates
Provision for (reversal of) doubtful receivables
Provision for contingent loss
(Decrease) increase in liabilities for retirement benefits(Gain) loss on sales of property, plant and equipment, net
Loss on impairment of long-lived assets
Gain on sales of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates, net
Loss on write-down of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Changes in operating assets and liabilities:
Increase in receivables(Increase) decrease in inventories
Increase (decrease) in payables
Other—net
Total adjustments
Net cash provided by operating activities

Thousands of
U.S. Dollars (Note)Segment Information

History

Years Ended March 31, 2018 and 2017
Millions of Yen

2018

Other:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets

Established Nisshin Cotton Spinning Co., Ltd.

1958

Established Nippon Kohbunshikan Co., Ltd. (name changed to Nippon Kohbunshi Co., Ltd. in 1986)(acquired by Nisshinbo Mechatronics Inc. in 2010)

Automobile
BrakesPrecision
Instruments

Chemicals

TextilesReal Estate

Other
Businesses

Eliminations/
Corporate

Consolidated

1972

Established Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)¥193,621¥154,205¥64,918¥11,285¥54,640¥8,406¥24,973¥—¥512,0481989

12¥193,633

22¥154,227333¥65,251

146¥11,4314¥54,644

1,473¥9,8791,605¥26,578(3,595)¥(3,595)—¥512,048

Established Kohbunshi (Thailand) Ltd. (Thailand)(name changed to Nisshinbo Mechatronics (Thailand) Ltd. in 2011)

1993

Established Pudong Kohbunshi (Shanghai) Co., Ltd. (China)(name changed to Nisshinbo Mechatronics (Shanghai) Co., Ltd. in 2010)¥3,022¥229,694¥6,119¥171,161¥1,725¥74,964¥2,112¥9,369¥1,876¥54,509¥5,067¥49,460¥46¥34,188¥(4,881)¥30,882¥15,086¥654,227

1995

Established Nisshinbo Urban Development Co., Ltd.

1996

Established Nisshinbo Somboon Automotive Co., Ltd. (Thailand)

1997

Established Nisshinbo Automotive Manufacturing Inc. (U.S.A.)

1998

Established P.T. Gistex Nisshinbo Indonesia (Indonesia)(name changed to P.T. Nisshinbo Indonesia in 2010)

1999

Established Saeron Automotive Corporation (South Korea)

2000

Purchased additional shares of P.T. Nikawa Textile Industry (Indonesia)¥5,298¥10,101¥3,571¥220¥1,340¥1,249¥204¥200¥22,183¥6,185¥15,340¥5,574¥47¥2,152¥1,095¥43¥(333)¥30,103
Millions of Yen

Established Continental Teves Co., Ltd. through merger with Continental Teves AG & Co. oHG(name changed to Continental Automotive Co., Ltd. in 2007)

2017
Electronics

Chemicals

TextilesPapersOther Eliminations/
Consolidated
Businesses
Corporate

Real Estate

2002

Acquired all shares of Iwao & Co., Ltd.
¥190,852 ¥146,062
30
27¥190,882 ¥146,089¥(3,240)¥(7)¥215,959 ¥151,264¥60,687
798¥61,485¥1,049¥72,135¥9,483¥55,842

116¥9,5997¥55,849¥1,309¥8,430¥1,777¥56,660¥32,648765¥33,413¥2,603¥21,494¥8,084
2,074¥10,158¥5,811¥53,762¥23,616¥— ¥527,274

1,686¥25,302(5,503)—¥(5,503) ¥527,274¥(91)¥37,392¥(4,321)¥4,890¥29,192 ¥646,288¥4,832¥9,556¥3,048¥307¥1,493¥989¥1,556¥194¥289¥22,264¥8,597¥11,150¥4,994¥322¥1,282¥561¥1,053¥3,065¥(519)¥30,505

2003

Established Saeron Automotive Beijing Corporation (China)

2004

Established Continental Automotive Corporation (Lian Yun Gang) Co., Ltd. (China)

2005

Acquired additional shares of New Japan Radio Co., Ltd.

2006

Acquired additional shares of Japan Radio Co., Ltd. and Nagano Japan Radio Co., Ltd.

2008

Acquired all shares of Nisshinbo Brake Sales Co., Ltd. (acquired by Nisshinbo Brake Inc. in 2010)2009

Spun off five businesses — Textiles, Automobile Brakes, Papers, Precision Instruments, and Chemicals — andconverted to holding company; corporate name changed to Nisshinbo Holdings Inc.

2010

Established Nisshinbo-Yawei Precision Instruments & Machinery (Jiangsu) Co., Ltd. (China)(formerly Jiangsu Yawei Nisshinbo Precision Instruments & Machinery Co., Ltd.)
Acquired additional shares of Japan Radio Co., Ltd., making it a consolidated subsidiary
Nagano Japan Radio Co., Ltd. also became a consolidated subsidiary as a result

2011

Thousands of U.S. Dollars (Note)

Electronics

Precision
Instruments

Chemicals

TextilesReal Estate

Other
Businesses

Eliminations/
Corporate

Consolidated$1,844,010 $1,468,619$618,267$107,476$520,381$80,057$237,838$— $4,876,648

114
210$1,844,124 $1,468,829

3,171$621,438

1,390$108,866

38$520,419

14,029$94,086

15,286$253,124(34,238)—$(34,238) $4,876,648$28,781$58,276$2,187,562 $1,630,105$16,429$713,943$20,114$89,228$17,867$519,133$48,257$471,048$438$325,600$(46,486) $143,676$294,114 $6,230,733

Acquired all shares of TMD Friction Group S.A. (Luxembourg)
2012

Established Nisshinbo Business Management (Shanghai) Co., Ltd. (China)

2014

Established Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd. (China)

2015

Acquired all outstanding shares of TOKYO SHIRTS CO., LTD.
Changed Company’s sector classification on stock markets from textile products to electrical equipment
Acquired all outstanding shares of Nanbu Plastics Co., Ltd.

2016

Nagano Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd. became wholly consolidated subsidiaries ofJapan Radio Co., Ltd.

2017

Sold the papers business$96,200$34,010$2,095$12,762$11,895$1,943$1,905$211,267$58,905$146,095$53,086$448$20,495$10,428$409$(3,171)$286,695

2018

Acquired Ricoh Electronic Devices Co., Ltd., making it a consolidated subsidiary
Sold the foundation brakes business
Established JRC Mobility Inc.
New Japan Radio Co., Ltd. became a wholly owned consolidated subsidiary86

87

Financials

Japan Radio Co., Ltd. became a wholly owned consolidated subsidiary$50,457

Management Framework

Other:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets

Automobile
BrakesEstablished Nisshinbo Saeron (Changshu) Automotive Co., Ltd. (China)
Established Nisshinbo Singapore Pte. Ltd. (Singapore)

2018

Sales:
Sales to externalcustomers
Intersegment sales
or transfers
Total
Segment profit[Operating income]Segment assets

Established Nisshinbo (Shanghai) Co., Ltd. (China)

Business Segments

Other:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets

Precision
Instruments

Special Feature

Sales:
Sales to externalcustomers
Intersegment sales
or transfers
Total
Segment profit (loss)[Operating income(loss)]
Segment assets

Automobile
BrakesStrategyElectronics

ProfileSales:
Sales to externalcustomers
Intersegment sales
or transfers
Total
Segment profit[Operating income]Segment assets

1907

Key Companies in the Nisshinbo Group

Corporate Data
(As of March 31, 2018)

Company

Location

Main Products and Services

Electronics

FoundedComposition of Shareholders

February 5, 1907

¥27,588 million (US$251 million)

Japan Radio Co., Ltd.

Japan

Disaster prevention systems,
mobile communications equipment

Alphatron Marine Beheer B.V.

The Netherlands Navigation equipment

Micro Devices
New Japan Radio Co., Ltd.

Japan

Electronic devices, microwave products

Ricoh Electronic Devices Co., Ltd.

Japan

Electronic devices

9.4%

1.7%

Common Stock

Wireless and Communications

Treasury stock

Securities firms

Japanese individuals
and others

Japanese financial
institutions

15.9%

Employees
Parent Company
Subsidiaries
Total

219
22,885
23,104

39.3%

Other Japaneseinstitutions

Foreign institutions

16.1%

17.6%

Head Office
2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku,
Tokyo 103-8650, Japan

Automobile Brakes
Nisshinbo Brake Inc.

Japan

Automobile brake friction materials

TMD Friction Group S.A.

EuropeAutomobile brake friction materials

Saeron Automotive Corporation

South Korea

Automobile brake friction materials

Nisshinbo Automotive Manufacturing Inc.

U.S.A.

Automobile brake friction materials

Nisshinbo Somboon Automotive Co., Ltd.

Thailand

Automobile brake friction materials

Nisshinbo Saeron Changshu Automotive Co., Ltd.

China

Automobile brake friction materials

Shareholders
23,503

Basic Stock Information

Major Shareholders

SectorElectrical equipment

Stock code

3105

Shareholder name

Number of shares per trading unit 100 shares

Precision Instruments

January 1 to December 31

Japan

Nisshinbo Mechatronics Inc.

Japan

Nanbu Plastics Co., Ltd.

Plastic products, automotive precision parts
Plastic products

Nisshinbo Precision Instrument & Machinery Hiroshima Corporation Japan

Automotive precision parts

Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd.

China

Automotive precision parts

Nisshinbo Mechatronics (Thailand) Ltd.

Thailand

Plastic productsContinental Automotive Corporation

Japan

Automotive precision parts

Business year

* The 176th period is a nine-month fiscal period
from April 1, 2018 to December 31, 2018.

Shareholder record datefor dividends

Japan

Nisshinbo Chemical Inc.

* The interim dividend record date for the 176th
period is September 30, 2018.

Shareholding ratio(%)

The Master Trust Bank of Japan, Ltd.

26,338

16.26

Japan Trustee Services Bank, Ltd.

21,345

13.18

Fukoku Mutual Life Insurance Company

12,000

7.41

Teijin Ltd.

6,028

3.72

Trust & Custody Services Bank, Ltd.

4,698

2.90

Total shares authorized

371,755,000 shares

Shikoku Chemicals Corporation

2,600

1.61

Total shares issued

178,798,939 shares(As of March 31, 2018)

Mizuho Bank, Ltd.

2,345

1.45

Treasury stock

16,818,957 shares(As of March 31, 2018)
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Transfer agent

Chemicals

December 31 (June 30 for interim dividend)(As of March 31, 2018)
Number of shares held
(thousand shares)

The Japan Wool Textile Co., Ltd.

2,282

1.41

JP MORGAN CHASE BANK 385151

1,825

1.13

Nisshin Cotton Spinning Clients’Shareholding Association

1,754

1.08

Urethane products,
high-performance chemical products

Stock Price and Trading Volume

TextilesNisshinbo Textile Inc.

Japan

Shirt fabric, developed materials

NISSHINTOA IWAO INC.

Japan

Textile productsTOKYO SHIRTS CO., LTD.

Japan

ShirtsNisshinbo Do Brasil Industria Textil Ltda.

BrazilTextile spinning

PT. Nikawa Textile Industry

Indonesia

Textile spinning and weaving

PT. Nisshinbo Indonesia

Indonesia

Textile weaving and dyeing(yen)(million shares)

1,800

60

Stock price (left)

1,500

50

1,200

40

900

30

Trading volume (right)

Real EstateJapan

Nisshinbo Urban Development Co., Ltd.

Real estate operations

Other
Nisshinbo Singapore Pte. Ltd.

Singapore

Group company support

Nisshinbo Business Management (Shanghai) Co., Ltd.

China

Group company support

88

600

20

300

10

0

0

9/15

12/15

3/16

6/16

9/16

12/16

89

3/17

6/17

9/17

12/17

3/18

6/18